The Importance of Choosing the Right ROBS Administrator

If you’ve decided to fund your startup through a Rollover as Business Startup (ROBS), you can’t just jump right in. Your first step will be to find a third-party administrator (TPA) that can walk you through the process and get your funds prepared. However, not all TPAs will be the right choice for your business.

Setting up and administering a ROBS structure requires knowledge of complex legislation and IRS requirements. If things go wrong during this process, you could owe thousands of dollars in tax penalties and legal fees, on top of jeopardizing your business’s launch or growth.

A TPA will ensure that your plan is set up properly, approved by the IRS and monitored consistently so that it remains in compliance. The administrator you choose should be knowledgeable, experienced and, most importantly, trustworthy. Choosing an unqualified or inexperienced TPA could end badly for your business. Therefore, researching and selecting the right administration for your ROBS account is critical.

What to look for in your ROBS administrator

During your search for the right TPA for your new ROBS funding plan, look online and check reviews to learn more about your options and find the right company who meets these standards:

  • Experience: One of the most important things to look for in a TPA for ROBS funding is experience. Without a deep understanding of the tax rules and regulations surrounding ROBS, the company will not be able to set up and administer your plan successfully. Look for companies that have been administering ROBS funding to startups for many years with thousands of plans and happy clients.
  • Successful track record: Just as important as experience, a successful track record for ROBS plans is essential for your potential TPA. Inquire about how many of the company’s plans have been audited or flagged for non-compliance, and how many have led to successful businesses. If the TPA has a clean record, it’s safe to assume you’ll be in good hands.
  • Fast funding: You don’t want to be waiting for your business funding for months and months. A reliable TPA can make the ROBS installation process quick and simple so you get your funding as fast as possible. Look into how long the typical funding process takes for any potential TPA. It helps if the administrator has pre-approved plans, which can help speed up the IRS qualification process.
  • Great service: ROBS funding structures are complex. While you don’t need to know every detail, it’s a good idea to be educated about the general structure and requirements. Your TPA should be willing to explain these structures to you, answer questions and clear up confusion before you launch your plan as part of their customer service. Moreover, your TPA should remain in contact with you throughout the process and after the plan is set up to make sure everything is running smoothly.
  • Other funding expertise: After capitalizing your business with ROBS, there’s a good chance you’ll need access to other funding sources, like SBA loans or lines of credit, to keep your business financially fit. Working with a TPA that offers diversified funding options helps you streamline your funding and piece your financing products together more easily.

Tenet Financial Group checks all these boxes and more. When it comes to the installation and ongoing maintenance of self-directed 401(k) plans, Tenet Financial Group has years of experience successfully administering ROBS to help aspiring entrepreneurs launch their businesses. Our team focuses on education, not sales, and will remain dedicated to keeping you informed every step of the way. Contact Tenet Financial Group today to learn more!