Identifying the Ideal ROBS+ Candidate

Post Date: June 6, 2024
Identifying the Ideal ROBS+ Candidate

Identifying the Ideal ROBS+ Candidate

Choosing the best financial strategies for clients is essential. At Benetrends, understanding the profiles and characteristics that make someone an ideal candidate for the ROBS+ Plan is key. Let’s explore what makes an ideal ROBS+ candidate, why some individuals might not be suited for this program, and how brokers can effectively navigate between ROBS+ and ROBS (Rollovers as Business Startups).

Who is the Ideal ROBS+ Candidate?

While theoretically anyone can be a ROBS+ candidate, certain characteristics make someone stand out. Here are the key attributes of an ideal ROBS+ candidate:

  • Ability to Fund Without Retirement Plan Funds: The perfect ROBS+ candidate can fund a business opportunity without heavily relying on retirement plan funds. Having some retirement funds available is beneficial, but the main focus is on using other resources for initial business financing.
  • Substantial Income Retention: Candidates with significant income who want to retain as much of it as possible find ROBS+ particularly advantageous. This strategy helps mitigate income tax and capital gains tax, making it an excellent choice for high earners.
  • Multiple Units or Territories Acquisition: ROBS+ is especially favorable for individuals interested in purchasing multiple business units or territories. This approach aligns with long-term wealth growth rather than just immediate funding needs.

ROBS+ is a wealth growth strategy rather than a funding strategy, making it suitable for those focused on long-term financial stability and tax mitigation.

Who Might Not Be the Best Fit for ROBS+?

Not everyone is suited for ROBS+. Here are some scenarios where a candidate might not be the best fit:

  • Lack of Sufficient Liquid Cash: Candidates who do not have adequate liquid cash and cannot secure an SBA loan or a fleet program loan are not ideal for ROBS+. The program’s taxable nature upon the initial investment can be a significant drawback for those without sufficient cash reserves.
  • Dependence on Retirement Dollars: Individuals who need to use their retirement dollars to fund a business would not benefit from ROBS+. Rolling over large sums, such as $300,000, into ROBS+ is not advisable due to the initial taxable event associated with its post-tax nature.

Assessing ROBS+ involves evaluating how much of their retirement plan dollars the candidate needs and emphasizing that ROBS+ is designed more for wealth protection than direct funding.

Guidance for Brokers: ROBS+ vs. ROBS

Determining whether ROBS+ or ROBS would be a better fit for a client can be challenging. Here’s some advice for brokers:

  • Evaluate Overall Financial Situation: Consider the overall financial situation, including available cash reserves and retirement plan dollars. Wealthy individuals, particularly business owners, might not have significant retirement plan dollars, making ROBS+ a suitable option.
  • Assess Long-Term Goals: Understand the long-term financial goals. If the focus is on wealth growth and tax mitigation, ROBS+ might be the better choice. However, if immediate business funding is needed, ROBS could be more appropriate.
  • Expert Involvement: Typically, identifying the right program is the responsibility of financial experts who can thoroughly evaluate the financial landscape. For instance, a recent case involved a client with substantial cash but no retirement plan dollars. An IRA was created to fund the ROBS+, demonstrating the importance of professional assessment.

By carefully analyzing these factors, brokers can guide clients toward the most suitable financial strategy, ensuring sustained success and stability.

Understanding the ideal ROBS+ candidate involves recognizing financial capabilities and long-term goals. Not every candidate is suited for ROBS+ , and distinguishing between ROBS+ and ROBS requires a nuanced approach. By leveraging professional expertise and evaluating the overall financial situation, brokers can ensure informed decisions that align with wealth growth and tax mitigation objectives.

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