ROBS (Rollover Business Startup) is a mechanism you can use to create a business with your own retirement funds. Do your goals for 2017 include starting your own business? Do you want to use some of your own retirement funds to help launch your enterprise? Here are a few first steps to creating a ROBS funded business:
1. Make Sure your Qualified Funds are Transferable
Most qualified funds are eligible to transfer to a new 401K plan. Some people ask whether they can use their qualified funds from an existing employer’s 401K plan if they have no desire to leave their employment. Only if you are over 59 1/2. I have also seen a few pension plans that will not allow a transfer. Other than that, your funds should be eligible. IF you have any doubts on transfer ability, ask your plan administrator. If they don’t know (I’ve seen it happen), let me help you find out.
2. Your Idea needs to become an Operating Company
Starting your own business will likely create an operating company, which is simply creating a product or service for profit. A few people present ideas that are hobbies, or they want to start a non-profit. Neither of those concepts qualify to use a ROBS. If you are starting a franchise, marketing a professional service, launching an internet based operation, you are creating an operating company. This is a mandatory, but easy to meet, qualification for ROBS funding.
3. Follow the Proper ROBS Setup Steps
A properly setup ROBS arrangement sets you up for plan administrative success and ease. An improper setup will create headaches for years. This is where I can help. I create the corporation for you, connect you with one of the best third party plan administrators in the country for employer stock plans, work with them to create your plan and all of the necessary corporate and plan paperwork, help you transfer your funds, create the stock ledger showing the personal and plan ownership. We leave you with a properly funded corporation, ready to launch your new business idea.
Want to discuss further? Set up a no cost or obligation 15 minute consult on our calendar or call 425.990.1021.