Rollover as Business Startup (ROBS 401k) FAQ – What is a reasonable salary for my ROBS Business?
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ROBS 401k FAQ: Reasonable Salary Considerations
I am leaving my high-paying position as a Vice President at Fortune 500 company to start a cupcake business funded via a ROBS 401K Business Financing plan. I also have a couple of kids in private school. Based on my work experience and my need, I feel that it is justified for me to continue to receive the same compensation that I received in my prior position from my cupcake business – does this sound right?
No – while you may receive a reasonable salary from the ROBS-funded C-corporation once it is generating income to justify your salary, the considerations in terms of what is a reasonable don’t include the compensation that you received for prior unrelated work history nor your personal expense needs.