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Roll Over Business Start-ups (ROBS) with Kevin Hunter and Jeffrey O'Brien TBFS

  • Broadcast in Business
The Business Forum Show TBFS

The Business Forum Show TBFS


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Join Kevin Hunter and Jeffrey O'Brien on TBFS Radio Network as they discuss ROBS - Roll Over Business Start-ups. 

via www.wealthcounsel.com 

A Proper ROBS Structure:

ROBS arrangements typically involve the following sequential steps:

  1. Establish a new corporation;
  2. The corporation hires the entrepreneur as an employee;
  3. The corporation adopts a 401(k) plan that specifically permits plan participants to direct the investment of their plan accounts into a selection of investment options, including employer stock;
  4. The entrepreneur as employee initiates a direct rollover or trustee-to-trustee transfer of retirement funds from another qualified retirement plan into the newly established plan;
  5. The entrepreneur as employee then directs the investment of his or her 401(k) plan account to purchase the corporation’s stock at par value;
  6. The entrepreneur personally acquires corporate stock in exchange for direct investments into the corporation, assets transferred to the corporation, or as reimbursement for start-up costs; and
  7. The company utilizes the proceeds from the sale of stock to purchase an existing business, fund an existing business, or begin a new venture.

A wise entrepreneur will understand what the promoter is doing for them versus what they still need to do for themselves. In general, a ROBS promoter creates the corporation, registers the Plan, and provides documentation to their clients that cover the adoption of the Plan by the company and issuance of the stock to the entrepreneur and the Plan. Since the client is, typically, the Plan Trustee, the Board and Officers of the Corporation, the excuse “I thought they were going to do that” will not work.

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