Explanation of the ROBS Transaction

Question 1: Can you send to us via email including Karin our accountant any written explanation of how this roll over work?

Answer: Below is a written description of the steps in a ROBS transaction

  • A new C-Corporation is formed/registered with the secretary of state
  • The C-Corporation sponsors a prototype 401k profit sharing plan that specifically permits plan participants to invest their retirement funds in employer stock (i.e. shares of common stock of the C-Corporation).
  • The business owner and, if the business has full-time employees, elect to participate in the 401(k) plan.
  • The 401k participants elect to transfer former employer retirement funds such a 401k, 403b, 401a, 457b, DBP or IRAs to the newly established C-Corporation 401k profit sharing plan.
  • The 401k participant(s) then self directs the newly established 401k to purchase the C-Corporation’s newly issued common stock.
  • The new C-Corporation uses the proceeds from the stock offering to purchase an existing franchise or to start a new business venture.


Question 2:  benefits, pros and cons, if we can as owners be able to administrate the rentals?

Answer: Yes. If the business that is funded with your retirement funds is a real estate operating company (i.e., it manages/develops real estate), then yes you will be able to active in the business including the management of any rental properties owned by the company.  As far as the benefits, below is a link to a post from our attorney’s blog explaining the benefits of funding your business with retirement funds over traditional debt and equity business financing:


Question 3:  do we have to have a different pension account other than the business account to deposit the profits every month?


Answer: While there will be two accounts (i.e., a brokerage account for the 401k and a bank account for the business), the profits of the business will be deposited into the business bank account. If the company elects to issue dividends to the stockholders, a portion of the dividends (that corresponds to the 401k’s ownership percentage in the company) will be transferred to the 401k brokerage account

Question 4: what kind of administration you do towards the account and which account? Pension or business account? How does that work? Exactly what job you will be doing every month to handle the account transactions?

Answer 5: We provide our annual 401k compliance support services.  These services relate to the 401k rather than company.  For a description of these services, please see the following link:


About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>


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