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ROBS 401K Business Financing FAQ: What happens to the ROBS 401k plan if I sell my business?
QUESTION:
What happens to the ROBS 401k plan if I sell the business?
RESPONSE:
Based on our experience, most clients who sell their ROBS-funded business do so via an asset sale and then wind down the corporation. In the case of an asset sale, the proceeds of the sale will transfer from the buyer to the C-corp and not the ROBS 401k account. The C-corporation would then pay any amounts owed to creditors, and then return all remaining funds to the stockholders (i.e., you and the 401k) in accordance with the ownership percentages. The 401k plan would then need to be wound down and the 401k assets transferred to an IRA account where the funds could be invested in traditional investments such as mutual funds, etc.
