Rollover as Business Startup (ROBS 401k) FAQ – What is a reasonable salary for my ROBS Business?
Please check out this good question from our Daily Live Zoom call. Subscribe to our YouTube Channel to get notifications of our Daily FAQs.
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?
RESPONSE:
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.
