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How to Set Up Rollovers (ROBS) in 7 Steps

Posted June 11, 2019 by EasyFinance.com to Small Business / Entrepreneurship 1 0

A ROBS (rollover for business startups) lets you have access to retirement funds when starting a new business. In order to set up a ROBS, you need to roll an existing 401(k) plan into a C-corp retirement plan. This way, you will actually use your retirement funds to purchase shares in a new company.

However, keep in mind that you'll have to manage a very complex process to avoid withdrawal penalties and taxes when setting up your ROBS. It is best to consult an independent lawyer who will guide you throughout this procedure. Not only will you get retirement funds more quickly, but you will also handle audits and ongoing maintenance more efficiently.

Find Out if You Can Qualify for a ROBS

First things first, you need to determine whether or not this is the right option for you. ROBS Rollovers are perfect for those wanting to avoid underwriting standards for conventional financing, such as collateral and credit checks. Still, there are some criteria you, actually your retirement account, must meet to get qualified for a ROBS:

  • Your retirement account must be eligible. Retirement accounts that can be accepted for a ROBS include IRA, 401(k), and 403(b).

  • You need to have $50,000 or more in your account.

  • Your retirement account cannot be associated with your current employer. The good news is that it can be from your previous employer.

Set Up a ROBS

Once you’ve determined that your retirement account meets these criteria, you will be ready to set up a ROBS and move forward. This procedure is quite complicated, though. Let us break this down as simple as possible for you.  

Step 1: Get in Touch with a ROBS Professional

Find someone who provides ROBS to get a free consultation. Professional advice can help you determine which ROBS plan is a good fit for your business. The goal is to choose a plan that suits both your personal situation and your business needs.

Step 2: Seek Advice from a Financing Consultant

You will also need to get in touch with a ROBS consultant to make certain a ROBS is the most suitable option for you. This is important because you need to be sure that you’ve picked a good provider and ideal ROBS plan. If so, a ROBS consultant will request some basic information about your business and your retirement plan as well.

Step 3: Pay the Setup Fees for a ROBS

At this stage, you will be required to make an initial payment in order to proceed with your ROBS setup. You will need to pay a $5,000 set-up fee. Plus, you will be charged an extra $140 for the first month.

Some ROBS providers give fair money back guarantee to those who give up this financing option later on. If you decide to cancel your rollover procedure and back out, a certain percentage of your set-up costs will be refunded. Please note that it doesn’t include hard costs like corporate filing fees.

Step 4: Prepare IRS Forms and Establish a C-corporation

It is necessary that your business is structured as a C-corporation to qualify for a ROBS. That’s because a stock sale to your retirement account is involved by the rollover. If your business isn’t established as a C-corporation, your ROBS provider will request some IRS forms. Remember that it may take some time to complete and file all the required paperwork.

Step 5: Speak to an ERISA Attorney

While you can skip this step, it is always a good idea to consult an ERISA counsel or lawyer specializing in rollovers for business startups. Be sure to prepare some questions in advance.

Here are a few good questions to ask your attorney:

  • Is there any audit risk during the ROBS setup process?

  • What will happen in case of an audit?

  • How much time does it take to do a ROBS?

  • How much will I need to to pay if I decide to handle this myself?

  • What happens to my retirement account in the event of a failure?

Step 6: Have a Retirement Plan Created for Your Corporation

This step plays an important role in setting up a rollover for business startups. Make sure that your plan complies with the regulations and laws established by the IRS. Your ROBS provider will assist you in creating a retirement plan that can work for just about any eligible employee and suits your business needs. When it comes to employee eligibility, it is important to point out that it may differ from one plan to another.

Once created, your retirement plan will then be entrusted to a TPA (third-party administrator) for further management, which typically involves:

  • Setting goals

  • Offering investment funds

  • Handling daily operations

  • Customizing investment strategy

Many major banks offer these services. Even if your business is not funded through a ROBS, you will be able to make use of a TPA by How setting up a 401K for your company.  

Step 7: Complete Rollover Process and Access Your Funds

In this final step, your retirement funds will be released so that you can use them for your company business plan. As mentioned before, this plan serves to buy shares of stock. That allows you to recapitalize your current business or run a new one. It takes a few weeks to get funded this way.


A ROBS could be a good funding option for your business. However, bear in mind that your retirement account should contain a minimum of $50,000 to set up a rollover. This is a complex and time-consuming process that takes some practice, so setting it up yourself can be a daunting challenge for you.

It is advisable to work closely with an experienced ROBS provider through this process. Your provider will not only help you maintain your account but also prevent unexpected fees and keep your business protected. You are also advised to schedule a few consultations with an attorney who specializes in this field. That will help you get a better understanding of how the rollover process works and make an informed decision.

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