The Rollovers for Business Startups (ROBS) strategy can empower entrepreneurs to launch their businesses using their retirement funds—without penalties or taxes. Yet, there are still many misconceptions surrounding ROBS. Let’s explore the facts, debunk the myths, and highlight how Benetrends helps franchisees and small business owners use ROBS to their advantage.
What Is ROBS?
ROBS (Rollover for Business Startups) is a funding strategy that allows you to invest your pre-tax retirement funds—like those from a 401(k) or another pre-tax retirement account—into your own business. You avoid early withdrawal penalties and taxes, while reinvesting the money into a venture that you control, rather than relying on market performance.
To put it simply, you’re moving funds from the stock market and placing them into your business, where the return on investment (ROI) depends on your business’s success.
Common Myths About ROBS
ROBS can be misunderstood, leading many potential business owners to dismiss it prematurely. Let’s clear up some common myths:
ROBS is only for 401(k) plans.
This is false. You can use any pre-tax retirement plan to fund your business through a ROBS structure. Whether it’s a 403(b), SEP IRA, or another qualifying plan, Benetrends ensures that you can roll over the funds appropriately.
Your business must have a 401(k) plan.
Many people believe that if they use ROBS, they are required to have a 401(k) plan for their business. This is not true. Benetrends designs a custom retirement plan based on your business’s unique needs, offering flexibility while staying compliant with IRS regulations.
How Benetrends Streamlines the ROBS Process
Navigating the ROBS process might seem complex, but Benetrends simplifies it by offering expert guidance at every step. From the moment you inquire about ROBS, our dedicated team assists you with:
- Consultation: Our sales team explains the process and evaluates if ROBS is the right fit.
- Onboarding: The onboarding team structures your ROBS setup, ensuring all legal and financial aspects are handled.
- Administration: Our 60+ Retirement Plan Analysts handle everything, from compliance testing to IRS form filings.
This approach ensures that every step, from setup to ongoing plan administration, is handled efficiently, allowing you to focus on growing your business.
Key Benefits of ROBS for Business Owners
Choosing ROBS as your funding strategy comes with several advantages:
- No Loan Payments: You’re not taking on debt, which means there’s no interest to pay back or loan terms to meet.
- Leverage Pre-Tax Funds: ROBS allows you to reinvest your retirement savings without the immediate tax burden, providing a significant financial advantage and increasing the available capital to grow your business.
- Flexibility: ROBS offers the flexibility to reinvest in a business that you believe in—without the stress of traditional lending or penalties.
Ensuring Compliance and Security
One of the major concerns with ROBS is ensuring compliance with IRS regulations. That’s where Benetrends excels. Our team of 60 Retirement Plan Analysts monitors your retirement plan’s compliance with:
- 5500 Forms: Annual reports required by the IRS for employer-sponsored retirement plans.
- Compliance Testing: We ensure that your business remains compliant with all IRS rules.
- Audit Protection: In the rare event that your plan is audited, Benetrends covers the audit costs down to the last penny. You’re fully protected.
Why ROBS Might Be Right for You
ROBS offers a powerful funding option for entrepreneurs ready to take control of their financial future. It allows you to invest in your own business, avoid tax penalties, and set yourself up for long-term success. By working with Benetrends, you get expert support at every step—from onboarding to ongoing administration—ensuring compliance and reducing risk.
If you’re considering using ROBS to fund your business, don’t let myths or complexities deter you. Contact Benetrends to learn more about how this funding option can help you achieve your entrepreneurial goals.