How it works
Establish a C Corporation
Establish a new C Corporation in the state the business will be operating. It must be a C corporation.
The Corporation adopts a 401(k)
The new C Corporation adopts a prototype 401(k) plan, permitting participants to direct the investment of their plan accounts into a selection of investment options. This includes employer stock or “qualifying employer securities.”
Participate in the 401(k) & purchase stock
You elect to participate in the new 401(k) plan, then direct a rollover of a prior employer’s 401(k) plan funds into the newly adopted plan. Using your 401(k), purchase the C Corp.’s newly issued stock at fair market value.
The C Corporation purchases assets
The C Corporation utilizes the proceeds from the sale of stocks to purchase the assets for the new business. The proceeds are the amount of rollover funds and personal funds you use.
Earn a salary
Now you can earn a salary from the revenues of the business and personally guarantee any business loan.
IRA Financial will help you create a fully compliant structure.
Due to IRS concerns over misuse of the structure, it’s crucial to work with a knowledgeable provider that will create a structure that is fully compliant with IRS and ERISA rules.
Download our info kit for more in-depth reading about the ROBS Solution
Robust, easy to read, and updated for 2020. This guide is your one-stop shop for all the most important questions about the ROBS Solution.
Did You Know?
Are even more changes likely coming to the retirement savings landscape? The SECURE Act of 2020 was designed to ease the looming retirement savings crisis in the U.S. by making it easier than ever for small businesses to start their own retirement plans. The annual tax credit for businesses offering a retirement plan has jumped up to $5,000 and you can continue to save as long as you have income. Reach out to us today for more information!