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Third-Party IRA Investors in ROBS Business Financing 401k
When seeking funds from other non-disqualified party IRA investors for investing in your 401k funded business, the Investor can invest her IRA funds in one of two ways:
Under this method, the IRA account holder invests her IRA in a limited liability company (LLC) where the IRA is the sole member of the LLC. Subsequently, the IRA LLC funds are invested via promissory note the ROBS 401k funded business. Since the investment is made as a note not an equity/stock investment, the IRA LLC is not a shareholder in the ROBS 401k funded C-corporation but rather a debtor.
When the IRA LLC is the debtor, the corporation will make note payments to the IRA LLC, and the payments are structured as interest only payments with a final balloon payment at maturity. The note payments can also be structured as interest and principal payments.
This method results in the IRA LLC owning shares of stock in the ROBS 401k funded C-corporation. As a result, the IRA LLC becomes a shareholder in the ROBS 401k funded corporation. The IRA LLC will benefit from the investment only after the corporation pays corporate taxes and if dividends are paid out by the corporation.