A rollover for business startups (ROBS) is a financing solution that lets you start or purchase a business with your retirement savings without paying taxes or early withdrawal penalties. Because of the compliance requirements and complexity involved in doing a ROBS, we recommend using an experienced ROBS provider. We have compared the best ROBS providers for small businesses:
- Guidant Financial: Best for businesses that want high-touch service, including free legal consultations.
- Benetrends: Best ROBS provider for lending and leasing options.
- FranFund: Best option for franchises.
- Pango Financial: Best option for external lending options.
- MySolo401kFinancial: Best option for affordability.
- Business Funding Trust: Best for those seeking to be the only employee of their business.
Guidant Financial: Best Overall ROBS Provider
Guidant Financial
What We Like
- Outstanding customer service
- Access to free legal counsel
- Access to other lending options
What's Missing
- Relatively high plan setup charge
Details
- Initial setup costs: $4,995
- Ongoing maintenance fees: $130 per month up to 10 participating employees; $3.33 per employee per month after that.
- Ongoing customer support: Audit support, plan eligibility tracking, IRS Form 5500 filing
- Additional financing offered: Small Business Administration (SBA) loans, secured and unsecured loans, equipment leasing
Guidant ranks as our best overall ROBS plan provider because of its customer service, access to free outside legal counsel before you set up your ROBS, and access to other lending options should a business owner need them. Guidant Financial will also pay for your legal counsel should an audit occur, which is a very strong selling point.
Guidant’s pricing is relatively high compared to its competitors. However, the customer service and access to legal counsel provide a high level of customer service that may be worth the price.
Benetrends: Best ROBS Provider for Leasing and Lending Options
Benetrends
What We Like
- High-quality customer service
- Extensive history and expertise in ROBS industry
- Access to many other lending options
What's Missing
- Relatively high plan setup charge
- No guarantee of access to outside counsel written within the contract
Details
- Initial setup costs: $4,995
- Ongoing maintenance fees: $130 per month
- Ongoing customer support: Audit support, plan eligibility tracking, IRS Form 5500 filing
- Additional financing offered: SBA loans, securities-backed line of credit, equipment leasing
Benetrends has nearly 40 years of experience in business financing, working with thousands of startups throughout its history. Its expertise can connect a business owner with other financing options should they need it, including equipment leasing and lines of credit backed through securities. Like Guidant, it has a higher price point than many of its competitors, but its knowledge and experience are among the best in the ROBS industry.
FranFund: Best Option for Franchises
FranFund
What We Like
- High-quality customer service
- Expertise in franchise financing
- Discount for veterans
What's Missing
- Relatively high plan setup charge
- Non-refundable loan application fee
Details
- Initial setup costs: $4,795; $3,995 for veterans
- Ongoing maintenance fees: $130 per month up to 10 participating employees
- Ongoing customer support: Audit support, plan eligibility tracking, IRS Form 5500 filing
- Additional financing offered: SBA and traditional loans, leasing
FranFund can perform ROBS transactions for any potential business owner. However, its specialty is franchises. Its setup price is slightly lower than Guidant and Benetrends and significantly lower for military veterans. One disadvantage to note is if you choose to pursue a loan in addition to a ROBS, its application fee for the loan is nonrefundable. However, its expertise in understanding franchises makes them an excellent option for those looking to purchase a new or existing franchise business.
Pango Financial: Best for External Lending Options
Pango Financial
What We Like
- Access to other financing options besides loans
- Robust online portal
- Affordable setup and monthly maintenance costs
What's Missing
- Possible lack of robust support in case of an audit
Details
- Initial setup costs: $3,995
- Ongoing maintenance fees: $110 per month
- Ongoing customer support: Audit support, plan eligibility tracking, IRS Form 5500 filing
- Additional financing offered: SBA and traditional loans, invoice factoring, lines of credit
Pango Financial offers competitive set-up and monthly maintenance fees, with the advantage of being one of the few ROBS providers to offer resources for invoice financing once your business is established. Pango also partners with SBA and conventional lenders to help provide additional financing. One disadvantage with Pango is a lack of legal counsel in case of audits.
MySolo401kFinancial: Best for Affordability
MySolo401k
What We Like
- Affordable
- Expertise in 401(k) and ROBS programs
- Affordable setup and monthly maintenance costs
What's Missing
- Limited support in other financing options
Details
- Initial setup costs: $3,000 (due to COVID-19)
- Ongoing maintenance fees: $899 annually up to 10 participating employees; $75 for each employee after that
- Ongoing customer support: Audit support, plan eligibility tracking, IRS Form 5500 filing
- Additional financing offered: SBA loans through network partners
MySolo401kFinancial is an affordable option for businesses with a limited number of employees and without the need for additional financing options. Unlike most ROBS providers, MySolo401kFinancial bills its administrative fees annually and, at $899, has a lower average monthly price point for maintenance than its other competitors. However, if you need other financing, MySolo401kFinancial only provides partnerships with other SBA lenders to assist you.
Business Funding Trust: Best Option for Sole-owner/Sole-employee Businesses
Business Funding Trust
What We Like
- No ongoing monthly fees
- Ideal for sole owner, sole employee businesses
- Tax credit available
What's Missing
- Limited support
Details
- Initial setup costs: $4,950 due after setup
- Ongoing maintenance fees: $300 per IRS Form 5500 filing
- Ongoing customer support: IRS Form 5500 filing
- Additional financing offered: None
Business Funding Trust provides a simplified method to set up a ROBS. It will provide the filing of the IRS Form 5500 for a business but does not offer support beyond the IRS filing, which means your business would need to manage the retirement plan for additional employees should there be any. Business Funding Trust is a great option for corporations that do not plan to hire additional employees and only need the ROBS plan to get the business established. Business Funding Trust’s fees are paid after the ROBS is set up, which means that the business could claim a $1,500 tax credit over three years.
How We Determined the Best ROBS Providers
ROBS providers help you set up and manage the required reporting for a rollover for business startups, which can be confusing and lead to audits if not done properly and on time. While all providers can guide you through the transaction, the best ROBS providers provide strong customer service and additional access to startup financing options should you need them.
The criteria we used to determine the best ROBS provider included:
- Setup fee: The initial cost of setting up a ROBS.
- Ongoing maintenance fees: The monthly or annual costs for maintaining the ROBS in accordance with IRS and United States Department of Labor regulations.
- Communication: How effectively and conveniently can ROBS providers be reached with questions.
- Support: The level of customer service business owners receive before, during, and after the ROBS is active, assisting business owners in filing required paperwork and plan maintenance.
- Additional financing options: Beyond the ROBS plan itself, what other options are available for the business owner.
- Customer reviews: How do other businesses view each provider.
Many ROBS providers have similar offerings. However, when using 401(k) business funding, customer service and support are critical for many busy business owners.
Bottom Line
Any of the six ROBS plan providers that we have ranked will provide business owners with a quality level of service. Guidant ranks best in our ranking because of its high-touch customer service and its guarantee of free outside legal support should your ROBS plan be subject to an audit.
