How it works
1. Establish a C Corp.
Establish a new C Corporation in the state the business will be operating. It must be a C corporation.
2. The C Corp. adopts a 401(k)
The C Corporation adopts a prototype 401(k) plan, letting participants direct their plans’ investments, including employer stock or “qualifying employer securities.”
3. Participate in the 401(k)
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.
4. Purchase stock
Using your 401(k), purchase the C Corporation’s newly issued stock at fair market value.
5. The C Corp. purchases assets
The C Corporation uses the proceeds from the sale of stock to purchase the assets for the new business.
6. Earn a salary
Now you can earn a salary from the revenue 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.
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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?
The ROBS Solution funds your retirement accounts, like a 401(k) or IRA. You can grow your business tax-free. Choose a retirement plan with IRA Financial. Reach out to us today for more information!