January 2, 2018 at 5:52 pm #142666
Hi Jeff: Can you tell me how you concluded that Roth 401(k) accounts can be used with the ROBS strategy as communicated on your webpage at https://fitsmallbusiness.com/rollover-business-startups-robs/
Here is the statement you make:
“Note: Roth IRAs and Roth 401(k) accounts are not eligible for ROBS.”
In my experience and understanding you can use Roth 401(k) monies for a ROBS transaction.
I’m not a Robs promoter, rather support several hundred clients who have engaged in the ROBS transaction, with their 401(k) Plan needs. We focus particularly on ROBS 401k Plans that have eligible employees beyond the owners and they need traditional investments added to their plan, enrollment kits, a participant call/email center and more.
Thanks in advance.
Kirsten Curry, CEO & Attorney
Leading Retirement SolutionsJanuary 2, 2018 at 5:56 pm #144006
Thanks for reaching out to us in the forums for clarification. The statement we made is accurate. Roth accounts can’t be used to setup a ROBS if you still want to be compliant with IRS rules. The IRS published a set of guidelines and it has been interpreted that the very nature of a ROBS works because you’re using a tax deferred retirement account, like a traditional 401k or IRA. Roth accounts are not tax deferred, so they don’t work for a ROBS. In fact, none of the ROBS professionals we work with will process a ROBS through a Roth account because it would be in violation of the IRS guidelines, and really would miss the entire point of implementing a ROBS to begin with.
Please let us know if you need further clarification about a ROBS.