Securing Retirement Funds for Business Success: ROBS Solutions | Joe Robert | Coins | February 2024

By Crypto Gloom On Feb 17, 2024

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As I mentioned, I recently attended three events over the course of two weeks.

In each of these I heard about ROBS.

ROBS stands for Rollover Business Startup. revenue ERISA approved structure.

This allows you to invest money from your retirement account into a business or franchise.

This plan allows you to simply purchase a business (C-Corp), become an operator, and pay a salary.

No other retirement plan can do this.

ROBS allows you to take funds from your existing 401k or IRA plan and set up a new 401k plan specifically for your new ROBS.

The new plan will then purchase stock in a new or existing business, which must be a C-corp.

You then roll over the funds to purchase shares of the C-Corp, effectively funding the business.

ROBS will own 98% or 99% of the C-Corp and you will own the remainder.

Some regulations require ownership to remain below 100% to prevent prohibited transactions.

As with any other company formation, it is important to hire a professional to set it up for you.

why is this like this It’s a really big deal.L? you can pay 21% Then take those dividends to your ROTH 401k and invest them permanently, tax-free.

Most of us will reach 59.5 before we know it or have already passed it, and there’s nothing better than making tax-free gains each year in your 401k plan.

Most people pay between 30 and 45 percent of their earned income, depending on your state. So you are already making immediate savings.

This structure is used to run an active (current income) business rather than a passive activity (which must be in a different account).

You can start with funds from an IRA or traditional 401k account.

You can start a new business or purchase an existing business. This business was purchased at fair market value, so you may already own it.

You can get a reasonable salary from a business.

Profits are taxed only at the corporate tax rate (21% in 2024). Some state taxes may apply.

Then your 401k (maybe Roth) can take dividends from ROBS and invest them tax-free every year.

Now imagine you need more capital for your new business. You can borrow money from a lender and personally guarantee the debt. This is something you cannot do with other accounts.

You can also lend money to ROBS at a fair market interest rate.

You can take advantage of the high contribution limits for your 401k plan. This means that between your contributions and dividends, you can build a meaningful 401k each year.

bonus: I know someone who sets up these structures for clients who use Puerto Rico’s Act 60 tax statute.

You can get a tax rate as low as 4%.

For this to work you will need staff on the island and you will need yourself for some time as services and work will need to be carried out there.

Rather than go into detail here, just send me an email if you’re ready to get set up.

Many custodians provide these services to us.

It’s important to choose the right one from the start.

You will want an account that allows self-directed accounts. This is very important for self-directed 401k funds.

Also, because there’s compliance, you’re going to need some sort of custodian to make sure you’re compliant.

Adam Bergman runs IRA Financial Group, which offers these plans at affordable prices.

He does a quick breakdown of ROBS in this video.