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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 • Jul 1, 2005

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.

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