For Subscribers

Forgo the Fund?

You're risking your retirement, but if you believe in your startup you can fund it with your 401(k).

By Nichole L. Torres

Opinions expressed by Entrepreneur contributors are their own.

That money in your 401(k) retirement account can look veryappealing when you're trying to finance your new startup.There's a balance in there, it's already your money, andyou feel like it's the quickest way to get your business offthe ground.

Using her 401(k) account was a successful move for Abbey Branch,founder and creator of the Abbey Branch line of trendy handbags that meldfashion, art and architecture. While working as a sales rep for awall-covering manufacturer, she decided to start her own company.To launch her brand, she felt she needed a substantial amount ofstartup capital. She already had a prototype and a few interestedinvestors, says Branch, 32, "but I had this gut feeling thatwith that would come unrealistic expectations." After somesoul-searching, she decided she could make back any money she tookfrom her $55,000 401(k), so she used the entire amount and paid$10,000 in penalties. The cash infusion helped her startmanufacturing and build her website in 2003 from her Spring, Texas,locale.

Continue reading this article — and all of our other premium content with Entrepreneur+

For just $5, you can get unlimited access to all Entrepreneur’s premium content. You’ll find:

  • Digestible insight on how to be a better entrepreneur and leader
  • Lessons for starting and growing a business from our expert network of CEOs and founders
  • Meaningful content to help you make sharper decisions
  • Business and life hacks to help you stay ahead of the curve

Editor's Pick

Everyone Wants to Get Close to Their Favorite Artist. Here's the Technology Making It a Reality — But Better.
The Highest-Paid, Highest-Profile People in Every Field Know This Communication Strategy
After Early Rejection From Publishers, This Author Self-Published Her Book and Sold More Than 500,000 Copies. Here's How She Did It.
Having Trouble Speaking Up in Meetings? Try This Strategy.
He Names Brands for Amazon, Meta and Forever 21, and Says This Is the Big Blank Space in the Naming Game
Business News

These Are the Most and Least Affordable Places to Retire in The U.S.

The Northeast and West Coast are the least affordable, while areas in the Mountain State region tend to be ideal for retirees on a budget.


6 Secret Tools for Flying First Class (Without Paying Full Price)

It's time to reimagine upgrading. Here's how to fly first class on every flight, business or personal.

Business News

I Live on a Cruise Ship for Half of the Year. Look Inside My 336-Square-Foot Cabin with Wraparound Balcony.

I live on a cruise ship with my husband, who works on it, for six months out of the year. Life at "home" can be tight. Here's what it's really like living on a cruise ship.

Thought Leaders

The Collapse of Credit Suisse: A Cautionary Tale of Resistance to Hybrid Work

This cautionary tale serves as a reminder for business leaders to adapt to the changing world of work and prioritize their workforce's needs and preferences.


8 Things I Discovered While Working With Affluent Clients in New York City

After a decade working with the 1%, I learned that they have common traits.

Starting a Business

A Founder Who Bootstrapped Her Jewelry Business with Just $1,000 Now Sees 7-Figure Revenue Because She Knew Something About Her Customers Nobody Else Did

Meg Strachan, founder and CEO of lab-grown jewelry company Dorsey, personally packed and shipped every order until she hit $1 million in sales.