401k / ROBS Funding

401k and ROBS Funding

Use your retirement savings to fund a franchise without taxes or early withdrawal penalties. A legal, IRS-approved strategy.

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What Is ROBS

Rollover for Business Startups explained simply

ROBS stands for Rollover for Business Startups. It is an IRS-approved strategy that allows you to use funds from a qualifying retirement account, such as a 401k, IRA, or 403b, to invest in a new franchise or business without paying taxes or early withdrawal penalties.

Instead of withdrawing the money, you roll it into a new C-corporation that becomes the operating entity for your franchise. The corporation then purchases stock in itself, and those funds are used to buy the franchise. Done correctly, this is fully legal and has helped thousands of entrepreneurs fund their businesses.

Important: ROBS must be structured correctly by a qualified provider to remain compliant with IRS regulations. We work with specialized ROBS providers who handle this process exclusively. We will connect you at no cost.

ROBS at a Glance

Minimum Amount Usually $50,000+
Tax on Transfer None if done correctly
Early Withdrawal Penalty None
Monthly Loan Payments None - it is equity, not debt
Qualifying Accounts 401k, IRA, 403b, TSP
Setup Time Typically 3 to 4 weeks
Pros and Cons

Is ROBS right for you?

Advantages
No loan payments, which helps cash flow in the early months
No early withdrawal penalties or income taxes on the transfer
Invest your own money without taking on debt
Available to most people with qualifying retirement accounts
Can be combined with an SBA loan for larger investments
Things to Consider
You are investing retirement funds, so business performance matters
Requires ongoing compliance with IRS regulations
Must use a qualified ROBS provider to stay compliant
Not suitable if your retirement account balance is very low
Annual maintenance fees apply, typically $1,500 to $2,000 per year
Common Questions

ROBS questions answered

Yes. ROBS is an IRS-recognized funding strategy. The IRS has issued guidelines on how it must be structured. When executed correctly by a qualified provider, it is fully compliant.
If the business fails, the retirement funds invested would be at risk, just as any business investment carries risk. This is why we always recommend thoroughly evaluating the franchise opportunity before using any funding strategy.
Yes, and this is a very common combination. Using ROBS to cover part of the investment and an SBA loan for the rest allows you to enter a franchise with little to no cash out of pocket while keeping your retirement funds partially invested.
Typically three to four weeks from start to when funds are available. It is one of the faster funding methods, which makes it popular for buyers who need to move quickly.
Most ROBS providers recommend a minimum of $50,000 in your qualifying account to make the structure worth the setup and compliance costs. Some providers work with lower amounts.

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