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ROBS Solution

For those who want to use retirement funds to start or fund a business.

The Rollover Business Startup (ROBS) Solution, also known as the Business Acquisition Solution, uses funds from eligible retirement accounts, like 401(k) or IRA, to invest in an existing/new business or franchise without tax or penalty.

The legality of the ROBS structure is based on an exception to the prohibited transaction rules under  Internal revenue Code Section 4975(d)(13) which allows a 401(k) plan to buy corporate stock. There are 4 steps to establishing an IRS compliant ROBS solution:

  1. The business is operated as a C Corporation
  2. The business has adopted a 401(k) plan
  3. The plan participant has rolled over IRA or 401(k) plan funds into the 401(k) plan
  4. The 401(k) plan purchases stock in the C Corporation in return for the cash invested from the 401(k) plan. 

The ROBS solution is the only legal solution that allows one to invest more than $50,000 of retirement funds into a business they will personally be involved in and work in without triggering the prohibited transaction rules.

Learn more about the ROBS Solution, and check out our blog, Forbes articlesvideos, and podcast for even more information.

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What our ROBS Solution offers

Start or Grow a Business Tax Free icon

Start or Grow a Business Tax Free

With our Rollover Business Startup (ROBS solution), you can access your retirement funds to start or grow a business tax free and without penalty.  Note that accessing your retirement funds can prove expensive if not structured properly.

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Earn a Salary

To be eligible to participate in the corporation 401(k) plan, you must become a W-2 employee of the C Corporation. For many entrepreneurs, earning a salary and being actively involved in the business is why they use a ROBS instead of a Self-Directed IRA.

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Invest in Yourself

This plan allows the holder to invest their retirement funds in a business that will be actively run by the retirement account holder. This means you can essentially invest your retirement funds on yourself. 

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Benefit from Trump Tax Plan

Prior to the 2017 tax plan, using a C Corporation for a small business was considered tax inefficient because of the 35% maximum corporate tax rate. The plan lowered the corporate tax rate to 21%, which has contributed to the re-emergence of the C Corporation as a popular business entity choice.

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Retain Key Employees

With most businesses offering their employees retirement benefits, it is worthwhile for small businesses to compete for talented workers by implementing 401(k) benefits. Offering 401(k) plan benefits is a great way to retain key employees.

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Strong Creditor Protection

Retirement accounts have become many Americans’ most valuable assets. As such, it’s vital that you have the ability to protect them from creditors, such as people who have won lawsuits against you.

Here’s what you get when you open an account with us

  • Establishment of one Corporation, including filing fees, assistance with filing Corporate Articles of Incorporation with the state, application for Corporation EIN, and application for plan trust EIN
  • Generation of all required initial corporate resolutions and minutes, the Stock Purchase Agreement, and the Employee Stock Purchase Agreement
  • Assistance with the adoption of 401(k) Plan, the transfer of funds to your new 401(k) bank account, and the establishment of business and plan bank accounts
  • Tax and ERISA support for the ROBS Solution and the 401(k) Plan, access to CPA regarding IRS Form 5500, and free consultation with in-house tax professional
  • Basic Plan Document and Summary Plan Description
  • EGTRRA Amendment and Trust Agreement
  • Appointment of Trustee and Beneficiary Designation
  • Guaranteed Audit protection


one-time establishment fee

starting at


record-keeping/plan testing fee

Terms you may have heard

We know there’s a lot of information out there; these terms will help you sort through the different types of plans.

C Corporation

You can set up a business in many ways, such as an LLC (Limited Liability Company). In fact, a corporation is legally seen as a person. In other words, it is subject to tax laws, and can even be sued. A C corporation is different than other corporations as it’s taxed separately from its shareholder. In contrast, an S corporation is taxed based on personal returns. The owner or shareholder has limited liability, which means if the company, is sued the owner or shareholder will not be sued.

In order to establish a Rollover for Business Startup (ROBS), you must form a C corporation and create a new 401(k) for the corp. This allows you to transfer funds from your personal retirement account to your C corporation 401(k) account.

Qualifying Employer Securities

According to the IRS (Internal Revenue Service), a prohibited transaction is a transaction between a retirement plan and a disqualified person. If you’re a disqualified person and you engage in a transaction the IRS does not approve, you receive a penalty. This allows the IRS protect its distribution rules, which generates revenue; however, it also facilitates the IRA holder to invest funds for retirement.

There is only one legal way to use your retirement funds for a business you or another disqualified person is involved in. This is through the Rollover for Business Startups solution (ROBS). It takes advantage of an exception in the tax code: the qualifying employer securities exception. This allows disqualified persons (such as you) to purchase stock in a C corporation.

401(k) Retirement Plan

Through the ROBS solution, the exception in the tax code (qualifying employer securities) allows you to use your retirement funds to invest in a business you’re personally involved in with your 401(k) plan funds. You can use your 401(k) plan funds to buy stock in a C corporation, and this won’t trigger the prohibited transaction rules.

With the ROBS arrangement, you roll over your previous 401(k) or IRA into a newly established 401(k) plan. A C corporation that is newly established or already exists must sponsor the new 401(k) plan. You then invest the funds from the rollover 401(k) plan into the stock of C corporation bank account to use for business purposes.

ROBS Memorandum

The Internal Revenue Service (IRS) wants to see your retirement funds grow in value. However, this isn’t for the benefit of the IRA holder, but so the IRS Treasury department can benefit from your RMD (Required Minimum Distributions) tax payments. The RMD rules require anyone with IRA or 401(k) to begin taking out a percentage of their retirement funds as a taxable distribution. This does not apply to the Roth IRA. 

However, if you take all of your retirement funds and invest in a personal business that has the potential of failing, the IRS receives no RMD or an extremely reduced RMD which negatively impacts the Treasury. As a result, in 2008, the IRS issued the ROBS memorandum, which acted as a warning to investors using the ROBS solution. It was designed for investors to stay up to date with compliance matters so the ROBS structure can be approved by the IRS.

Please review our Glossary of Terms for more information on important ROBS terms to help you direct your retirement account.

ROBS myths

Did You Know?

The SECURE Act makes it easier than ever for small businesses to start their own retirement plan.  Multiple Employer Plans (MEPs) can be shared by any types of businesses.  Further, the annual tax credit for businesses offering a retirement plan has jumped to $5,000.

Get a Free Consultation with a Tax Specialist!

Take control of your retirement investments. Give us a call at 1-800-472-0646 or fill out the form to learn more about establishing the ROBS Solution.

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