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How does the EB-5 Program view 401k as a source of funds?

Hi, I am planning to directly invest $500,000 in an EB-5 TEA rural project. Regarding the funds, I have $400,000 cash and $100,000 in 401k/IRAs. Do I have to liquidate my 401k at time of I-526 filing or can I postpone it until conditions are removed from my green card? Is this a viable source of funds?

Answers

  • Avatar

    BoBi Ahn

    Immigration Attorney
    Answered on

    Before you can file the I-526, you must have invested (or are imminently investing) the full minimum requisite capital ($500,000 for TEA projects/businesses, and $1million in non-TEA located projects/businesses).

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    The requirement is that the full amount of capital must be placed at-risk. You will have to liquidate your 401k and invest the full amount. Also, you will have to demonstrate how you lawfully earned the full investment amount.

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    Charles Foster

    Immigration Attorney
    Answered on

    Any lawful source of funds is acceptable including savings that you have in your 401(K) IRA account. Yes, you have to liquidate your 401(K) account if that is the source of your investment at or before the time you file your EB-5 Investor Petition on Form I-526. That would be a minimum requirement for each Regional Center project.

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    Ed Beshara

    Immigration Attorney
    Answered on

    Your personal investment funds have to be derived from lawful sources. The liquidation of your 401K can be a lawful source of personal funds towards your EB-5 investment. All the $5000,000 of personal funds must be placed in an escrow account or be irrevocably available to the EB-5 project at the time of filing the EB-5 I-526 petition.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    Many of our clients have used 401k to fund their investment at least partially. Because there is a penalty involved if you take the money out before you are qualified to do so, most people will take a loan out from the 401k. I believe there is a limit of $50,000 on that loan. While the regulation states that I-526 could be approved if the investor has shown that he/she has “invested” or “is actively in the process of investing,” these days, if the full investment amount has not been invested when I-526 was filed, USCIS will deny the case. Thus, you cannot wait until the condition has been removed to fully invest.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    401K is fine, but it will need to be liquidated and invested before the I-526 is filed.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    Using 401k/IRAs is a viable source of funds, but you must liquidate and actually invest the money and put it at-risk in order to qualify for benefits. While the regulations do talk about “investing” and “being in the process of investing,” failure to invest the full amount is extremely risky.

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    Phuong Le

    Immigration Attorney
    Answered on

    It should be acceptable for you to use $100,000 from your 401K/IRA account. However, while it may be possible, it may be worthwhile to consider whether you should liquidate your retirement accounts to fund your EB-5 investment. Although you can submit your initial I-526 petition with the $400,000 cash and a statement explaining that you are in the process of liquidating your retirement accounts to fund the balance, it is almost guaranteed that USCIS will issue either an RFE or NOID in about a year and a half to request proof that you liquidated $100,000 from your retirement accounts and completed the full $500,000 investment. Note that this will need to occur at the I-526 stage (you will not be able to postpone it to the I-829 stage. The simple explanation is that USCIS will deem you ineligible for EB-5 because you never completed the full $500,000 investment). If there is no other source for you to fund the remaining $100,000 then, yes, you can use it for your EB-5 investment. Otherwise, your financial adviser would probably urge you to keep it in your retirement accounts if possible and let compounding interest work in your favor.

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    Mitch Wexler

    Immigration Attorney
    Answered on

    401k proceeds are a fine source of funds, but the investment must be made prior to filing the EB-5 petition.

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    Natalia Polukhtin

    Immigration Attorney
    Answered on

    As long as the 401K was formed from legitimate employment and you have the authority to liquidate it, these funds can be used for the investment.

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    Irina Rostova

    Immigration Attorney
    Answered on

    All funds ($500,000) have to be committed to a project before you can file the I-526. The 401k is a viable source of funds as long as you can show how you earned the funds (paychecks, tax returns, etc.).

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