Rollover Business Startups (“ROBS”)
Rollover business startups can seem like a complex, risky method of starting a new business. However, a 401(k) Rollover Business Startup strategy is a practical and useful funding strategy if all of the legal requirements are properly followed. Rollover Business Start-Up method is an IRS and ERISA approved process that allows individuals to use retirement funds, such as an IRA or 401(k), to purchase a new or existing business without paying the taxes and penalties usually associated with using retirement funds.
A properly structured and managed ROBS plan will satisfy all the requirements of the tax laws and serve legitimate tax and business planning purposes. It is vital, however, that individuals who would fund their businesses through a Rollover Business Startup arrangement understand the multitude of potential legal pitfalls along the way and take their ongoing responsibilities as fiduciaries of their companies’ retirement plans seriously. At Marcellino & Tyson, we work with entrepreneurs to guide them through the steps that must be taken to help ensure that all rules and regulations are properly followed in starting a new business using the ROBS method.