The Requirements of a ROBS Funding Plan

ROBS funding (Rollover as a Business Startup) can be the ideal funding source if you are considering a startup business or new franchise, buying an existing business or even the recapitalization of an existing business. In addition to being a tax-deferred and penalty-free funding option, ROBS funding – sometimes referred to as a 401(k) Rollover – can be used in conjunction with a loan as the necessary non-borrowed cash equity injection if the following requirements are met:

  1. Qualifying Retirement Funds

Not all retirement funds can be used for a 401(k) Rollover. Your current retirement account must be a tax-deferred account, such as a 401(k), Keogh, TSP (Thrift Savings Plan), SEP, Traditional IRA, and others. Tenet Financial Group can help you determine if you have qualifying retirement accounts.

  1. Minimum Investment Recommendation

In order for a ROBS funding plan to be viable option, a minimum of $50,000 is recommended due to fees and other costs. The one-time cost to set up a ROBS through Tenet Financial Group is $4,995, plus a $120 monthly fee for maintenance to administer the new plan for the business.

  1. Retirement Funds Not with Current Employer

The retirement account you’re rolling funds over from can’t be administered by your current employer. You can, however, use a retirement account from a previous employer, no matter who the current custodian is.

  1. C-Corporation Must Be Formed

ROBS funding necessitates that a C-Corporation must be formed, not an S Corporation or LLC.

Tenet Financial Group has nearly eight decades of combined funding experience to its credit and our talented and dedicated team can help you determine if ROBS funding suits your current needs. We can also assist with other funding options such as SBA loans based on your individual situation. Contact us today to speak directly with a senior consultant – 1-888-901-3335.