Rollovers as Business Start-Ups (ROBS)

Rollovers as Business Start-Ups (ROBS) - [edit] ROBS...

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Rollovers as Business Start-Ups (ROBS)ROBS is an arrangement in which prospective business owners use their 401(k) retirement funds to pay for new business start-up costs.[14] 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, have been considered questionable because they may solely benefit one individual the individual who rolls over his or her existing retirement 401(k) 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 401(k) withdrawal.
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Unformatted text preview: [edit] ROBS Project Findings: New Business FailuresPreliminary results from the ROBS Project indicate that, although there were some success stories, most ROBS businesses either failed or were on the road to failure with high rates of bankruptcy (business and personal), liens (business and personal), and corporate dissolutions by individual Secretaries of State. Some of the individuals who started ROBS plans lost not only the retirement assets they accumulated over many years, but also their dream of owning a business. As a result, much of the retirement savings invested in their unsuccessful ROBS plan was depleted or lost, in many cases even before they had begun to offer their product or service to the public.[15]...
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