How to Choose Your ROBS Funding Service Provider

One of the biggest concerns of most entrepreneurs is how to find the funding they need to start or scale a business.

Rollover as Business Startup funding, better known as ROBS funding, is a popular option for many business owners, giving them a way to capitalize on their existing 401(k) funds. But ROBS funding has many tax and legal requirements that make it wise to seek help from a trusted advisor. While there are many companies out there that say they can help with ROBS funding, how can entrepreneurs choose the best one to ensure their funding is done correctly and that their ROBS plan is set up according to all legal requirements?

What to Look for in a ROBS Funding Provider

A ROBS works by taking the business owner’s retirement funds and rolling it into the business as capital. While this may sound simple, it can be complex, and getting it wrong can cost a business thousands of dollars in tax penalties. So, it makes sense to get help from a well-qualified, knowledgeable expert in ROBS funding. 

There are many funding and resource companies out there that offer this innovative solution, but the way they operate is vastly different. Before choosing a ROBS funding partner, consider these important questions:

  • What is the company’s experience with ROBS funding? How many of these transfers have they done? The IRS watches ROBS transactions carefully, so making the wrong choice can lead to hefty compliance violations that result in fines and penalties for the business owner. ROBS funding works by creating a C-Corp for the business and then creating a new retirement plan that the existing 401(k) funding can roll into. Here’s where slip-ups can occur. For example, companies that seek this type of funding often fail to offer their employees access to the rollover 401(k) in the new C-Corp. Or they may miss filing the Form 5500, an annual report for retirement plans. Therefore, it’s imperative that you work with a provider that understands these issues and helps keep your plan in compliance.
  • How quickly can the new 401(k) funding occur? Having fast access to retirement monies can matter in a fast-paced business. What if a deal needs to close but the entrepreneur needs a cash infusion?  Look for a ROBS provider that is highly responsive and that can get the paperwork and funds transferred quickly.
  • How helpful is the company? Do they establish trust with their clients and back it up with solid customer service? Do they offer continuing support and a package of services to support a business partner? Or are they primarily focused on sales and getting hired? Look for a provider that will take the time to educate and create transparency around a very complex process. Also, ROBS funding shouldn’t be a one-time service. There is ongoing support required to keep these plans compliant with IRS rules. Look for a 401(k)-funding expert that has the power to support the business for the long haul.

Creating charts and graphs on a document.
Benetrends Financial is that trusted advisor.  As the pioneer of ROBS funding nearly 40 years ago, we have been helping entrepreneurs launch their business dreams with our Rainmaker Plan®.  We also help with SBA loans and corporate capitalization strategies. Contact our team to find out how we can help or download The Definitive Guide To 401(k)/ROBS Business Funding to learn more today.


By accepting you will be accessing a service provided by a third-party external to http://www.benetrends.com/

  • 1684 South Broad Street | Suite 130, Lansdale,
    Pennsylvania 19446

  • This email address is being protected from spambots. You need JavaScript enabled to view it.
Our Pledge to You

Our mission is to make every Benetrends client our champion. For over 35 years, our Rainmaker Plan® has been tested and proven to work, providing a means for more than 17,000 entrepreneurs to achieve their dreams of business ownership, creating both jobs and prosperity. We are so confident in the Rainmaker Plan design that we stand fully behind our work, backing every client with our Rainmaker Guarantee.

  • BBB Logo
  • ASPPA Logo
  • IFA Logo
  • IBBA Logo
  • Vetfran Logo

Information provided by Benetrends Inc. is not intended to be used as legal or accounting advice, or as the sole basis for investment decisions, nor should it be construed as advice designed to meet the particular needs of an individual investor. Please seek the advice of legal or tax professionals, as appropriate, regarding the evaluation of any specific information, opinion, advice or other content.
© 2019 Benetrends, Inc. All rights reserved. Privacy Notice.