Rollovers as business start-ups (ROBS)
ROBS is an arrangement in which prospective business owners use their 401k retirement funds to pay for new business start-up costs.
[28] ROBS is an acronym from the United States
Internal Revenue Service for the IRS ROBS
Rollovers as Business Start-Ups Compliance Project.
ROBS plans, while not considered an abusive tax avoidance transaction, are questionable because they may solely benefit one individual – the individual who rolls over his or her existing retirement 401k withdrawal funds to the ROBS plan in a tax-free transaction. The ROBS plan then uses the rollover assets to purchase the stock of the new business. A
C corporation must be set up in order to roll the 401k withdrawal.
