While the 401k provider will take care of annual compliance items related to the business financing 401k (ROBS 401k), the business CPA should be aware of the following main items:
- The ROBS 401k funded business must be and remain a C-Corporation and NOT be an S corp as long as the 401k owns equity in the corporation.
- Ownership will be via (i) 401k for your benefit and (ii) you personally since you will invest at least 1% of your personal funds in the C-corporation.
- Any compensation that you receive for the work performed needs to be paid as w-2 wages
- No personal loans to company.
- No interact between the ROBS 401k funded business and other businesses that you own.
- Your only relationship should be w-2 employee and owner of the company.
