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Retirement Plans You Can Use with ROBS

The Rollover Business Start-Up is an IRS and ERISA approved structure. It allows you to invest funds from your retirement account in a new business/franchise. You can take funds from a traditional 401(k) or IRA to purchase a new or existing business/franchise tax and penalty free.

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IRA Financial Group has over a decade of experience helping investors self-direct their retirement
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Our tax and ERISA professionals have helped over 12,000 clients invest $3 billion in alternative assets.

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IFG founder Adam Bergman is a leading voice on self-directed retirement & has authored 7 books on self-directing.

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Our team will work one-on-one with you to establish a Self-Directed IRA, Solo 401(k) or ROBS solution that fits your goals.

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Book Cover: Turning Retirement Funds into Start-Up Dreams

We wrote the book on ROBS

Adam Bergman, founder of IRA Financial Group, has published 7 books on the topic of retirement plans and taxation, including the first published book on how to use retirement funds to purchase a business (Turning Retirement Funds Into Start-Up Dreams).

He is a frequent contributor to Forbes, has been quoted in over 250 major publications, and helped over 12,000 clients establish self-directed retirement plans to make alternative asset investments.

5 Advantages of the ROBS Solution

1. Save Money

The primary advantage of establishing a ROBS solution is the ability to use your retirement funds to invest in a business you have a personal involvement with. You’re able to invest retirement funds into the business without having to take a taxable distribution and a 10% early distribution penalty if under 59 1/2. As a result, the ROBS solution can save you close to 45% of the distribution amount.

2. Invest in Yourself

The ROBS solution allows you to invest your retirement funds in yourself rather than Wall Street. Of course, not all businesses are successful. According to Bloomberg, close to 80% of new businesses fail in the first 18 months. Therefore, investing your retirement funds in a new business is certainly risky. However, it is a risk that you are legally permissible to take as per the Internal Revenue Code.

3. Diversification

There is a growing sentiment amongst financial advisors that in order to protect your retirement funds from a market downturn, you must diversify your retirement funds. You cannot eliminate investment risk completely, but you can manage your level of risk. If you invest your retirement funds in different types of investments, such as stocks, real estate, and even private businesses, you can better protect your retirement funds.

4. Earn a Salary

In order to be a participant of a 401(k) Plan, you need to be an employee of the business adopting the plan. Therefore, in order 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, the ability to earn a salary and have involvement in the business is the reason they use a ROBS solution versus a self-directed IRA.

5. Benefit from having a 401(k) Retirement Plan

One of the best ways for you to save toward your own retirement and ensure your future security is through an employer-sponsored 401(k) plan. Below are some advantages of offering and participating in a 401(k) Plan.

  • Matching Contributions
  • Retaining employees
  • Easy Administration
  • You Can Participate

12k+ Customers Love IRA Financial

“I’ve worked with a lot of financial people. These people were smooth and explained everything, every step of the way. For a ROBS strategy, they made it simple and effective. HIGHLY RECOMMEND.”

Ed Radlow

“My corporate marketing role was eliminated after 15 years. It gave me the idea to finally start working for myself. But then fear set in and for weeks I felt paralyzed. I didn’t know how to make it happen. The professionals at IRA Financial Group helped me take the leap of faith I needed and now I’m operating and feeling so confident backed by a strong support network at IRA Financial Group. It’s so worth the investment.”

Tekisha Boone, MN

“First things First… I have to tell you how pleased we are with the services of your office IRA Financial and especially Enrique Estrada. He has been incredibly responsive to our issues in setting up the new “C” Corp with the ROBS 401K funds.”

Wes Fritz – General Ins. Agency Inc

Frequently Asked Questions

If structured correctly, yes. IRC Section 4975(c) includes a list of transactions that the IRS deems “prohibited”. However, Internal Revenue Code Section 4975(d) lists a number of exemptions to the prohibited transaction rules. Specifically Internal Revenue Code Section 4975(d)(13) lists an exemption for any transaction which is exempt from section 406 of the Employee Retirement Income Security Act of 1974 (ERISA) by reason of section 408(e) of such Act.

Section 408(e) provides that section 406 shall not apply to the acquisition or sale by a plan of qualifying employer securities (as defined in section 407(d)(5), provided that: (1) the acquisition or sale is for adequate consideration; (2) no commission is charged with respect to the acquisition or sale; and (3) the plan is an eligible individual account plan (as defined in section 407(d)(3)). A 401(k) plan fits in to this definition.

Pursuant to ERISA Section 406, the acquisition or sale must be for “adequate consideration.” Except in the case of a “marketable obligation”, adequate consideration for this purpose means a price not less favorable than the price determined under ERISA § 3(18),subject to a requirement that the acquisition or sale must be for “adequate consideration.” An exchange of company stock between the plan and its employer-sponsor would be a prohibited transaction, unless the requirements of ERISA § 408(e) are met.

With the Business Acquisition & Compliance Solution Structure (“BACSS”) also known as the Rollover Business Start-Up (“ROBS”) solution you are permitted to purchase almost any legal business or franchise. Whether you are starting a new business/franchise or buying an existing business, the BACSS will allow you to accomplish your business goals tax-free and without penalty.

  • Traditional IRAs
  • 401 (k) Plans
  • 403 (b) Plans
  • 457 Plans (for governmental agencies)
  • SEPs
  • SIMPLE Plans
  • Annuity Plans
  • Defined Benefit Plans
  • Rollover Plans

No. Internal Revenue Code Section 401 (a)(2) provides, in relevant part, that a plan is not qualified unless it is impossible, at any time prior to the satisfaction of all liabilities with respect to employees and their beneficiaries, for any part of the corpus or income to be used for or diverted to purposes other than for the exclusive benefit of employees or their beneficiaries. For example, you will not be permitted to use this structure to purchase personal assets, like recreational vehicles.

No. ERISA Section 408(e) provides that ERISA Section 406 shall not apply to the purchase by the Plan of qualifying employer securities (as defined in ERISA Section 407(d)(5)), provided that: (1) the acquisition or sale is for adequate consideration; (2) no commission is charged with respect to the acquisition or sale; and (3) the plan is an eligible individual account plan (as defined in ERISA Section 407(d)(3)). ERISA Section 407(d)(3) excludes IRAs from the definition of “eligible individual account plans.” A 401(k) plan fits in to this definition but not an IRA.

sets.

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“What about your IRA, including rollover IRA? You need to look at state law, advises tax attorney Adam Bergman of IRA Financial Group. ‘If you have a judgment against you and you don’t file for bankruptcy, most states will still protect your IRA…’”

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“Adam Bergman…gets several calls a day from clients looking to invest their retirement funds in real estate. ‘Our average client…is looking to buy one or two properties. After 2008, they didn’t trust Wall Street. They wanted hard assets.’”

USA Today logo
“Jeff Brown…transferred roughly $50,000 from his workplace 401(k) account to purchase homes to fix up and sell, partnering with a few other investors. He uses a self-directed IRA that he set up through IRA Financial Group in Miami Beach, Fla.”

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