Ask HN: IRA funds and 401(k)s as your startup funding source?

[itsybaev]

Hello hackers, I've just read the article: http://www.forbes.com/sites/martinzwilling/2013/03/06/10-more-creative-ways-to-finance-your-startup/

#10 says: IRA financing. Investment Retirement Account funds and 401(k)s are arguably the single most accessible alternative funding source available today for startups. You can’t use your own self-directed funds for your startup, but many others are willing and able to loan you money from theirs, for the right terms, if they believe in you and your cause.

Anybody from HN used IRA and 401(k) for startup funding and can explain the procedure?

[jcr]

Most startups fail. Betting your retirement funds on something likely to fail is entirely unwise. Allowing others to bet their retirement funds on something likely to fail is inconsiderate and possibly disingenuous. There is a reason why a person being qualified as an "Accredited Investor" is often a requirement for them to be allowed to invest in startups. The risk is substantial, and it's unwise to have people betting their retirement on risky investments.

[moocow01]

You need to start a C corp and roll it into a corporate retirement account under your new corporation. Your average financial advisor should be able to do this pretty cleanly for you.

That being said I think its a really really bad idea but what do I know

[itsybaev]

Then I wonder why it's a "creative way" according to the article)