Rollovers As Business Startups

The “Jury” Decides on ROBS – Can you legally fund a business purchase or startup with a Self-Directed 401k?

Boy do I get a lot of blowback every time I share my findings about why the government has declared ROBS illegal!

Why is there not a specific government ruling on ROBS?

Great question!

It’s because once an issue has been ruled on, they don’t repeatedly consider it. “They” are the Department of Labor, and the first step of learning about Self-Directed IRA and 401(k) rules is finding out that “prohibited transactions” are an issue outside the jurisdiction of the IRS and in the hands of the Department of Labor (DOL).

When ROBS Was Ruled On

It was 2006. Debra Buchanan, the creator of the IRA LLC, asked the DOL a question about [Read more…]

Nabers Group vs. the Other Guys

Why should you use my company to setup a Self-Directed IRA, IRA LLC, or Solo 401(k) instead of those others?

It’s quite simple really…

Those other companies all promote an illegal scheme called ROBS, and if you are a client of a company promoting an illegal scheme, you are a target for nasty IRS audits.

Best case audit scenario: After months or years of being audited, you are finally cleared. Your assets might be frozen during that time, and you may incur tens of thousands of dollars in attorney fees to defend yourself.

Worst case scenario: If you used the ROBS strategy yourself with, say a couple hundred thousand dollars, you could incur MILLIONS of dollars in taxes. Yep, you read that right. The tax penalties are [Read more…]

Buying A Business Or Franchise With A Rollovers As Business Startups Is A Big No-No According To Nabers

Thinking about rolling over your 401k to purchase a new franchise or a personal business venture, then you might want to think again?

Authors Jeff Nabers and Phoebe Chongchua (Five Steps to Freedom: How to Cut Your Dependence on Institutions and Escape Financial Slavery) suggest that using an investment structure known as Rollovers As Business Startups (ROBS) to fund a business startup or franchise is an IRA prohibited transaction.

Jeff Nabers is CEO of Nabers Group, an unconventional planning company in Denver, Colorado. His research and personal dealings with the Department of Labor compel him to recommend against the Rollovers as Business Startups strategy.

Nabers Group can be reached at (877) 903-2220. Watch more Nabers videos.

The End of Small Business Financing with IRA and 401k Funds? (Part 2)

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[This is a continuation of a previous post. You should read that one first so this makes sense.]

The IRS Responds

For the first time ever, the IRS actually addressed the “financing a small business with an IRA or 401(k)” strategy. They called it “ROBS” for “roll over business startup,” and issued a letter on October 1, 2008. This letter basically stated:

We know about the ROBS strategy
We are concerned about it for several reasons

Celebrate and Ignore

Most ROBS promoters spun the IRS ROBS letter as a long-awaited government blessing for the strategy. They said that the concerns that the IRS listed were administrative errors, such as [Read more…]

The End of Small Business Financing with IRA and 401k Funds? (Part 1)

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Guidant calls it Audeo. Benetrends calls it Rainmaker. SDCooper calls it ERSOP. It goes by many names and it’s gotten a lot of attention from the franchise industry and, as of about a year ago, the IRS. The IRS calls it “ROBS” for Roll-Over Business Startup.

What is it?

It’s a strategy where a person with retirement funds:

Forms a C corporation.
Uses the new C corporation to adopt a 401(k) or profit-sharing plan.
Performs a rollover from existing retirement funds (IRA, 401k, etc) into the new 401(k) plan.
Directs the new 401(k) plan to invest into the new C corporation by purchasing shares of stock.
Now this person has a C corporation with some or all of their retirement funds in it, and they are told they can use the funds to run the corporation, launch a venture, buy a franchise, and even pay themselves a salary.

Special Powers – For Good or Evil?

This is a tremendously [Read more…]