Funding Method
ROBS (401k Rollover)
Fund the business with retirement savings — penalty-free, tax-deferred, debt-free — via an IRS-recognized rollover.
ROBS (Rollover for Business Startups) lets you use eligible retirement funds to capitalize a franchise without triggering an early-withdrawal penalty or income tax. Because it is structured as a rollover rather than a distribution, the money moves into the business as equity, not debt — which is why people who want to avoid or reduce a loan often reach for it.
How it works
A specialist provider sets up a new C-corporation and a 401(k) plan for that corporation. Your existing eligible retirement funds roll into the new plan, which then invests in the company's stock — capitalizing the business with your own retirement money. It is an IRS-recognized structure, but the mechanics are specific and must be done correctly, which is why people use a ROBS provider rather than attempting it alone.
Who it tends to fit
It tends to fit buyers with substantial retirement savings who want to inject equity and minimize debt, or who need the funds for an SBA down payment. It is also used in combination with a loan rather than alone.
What to watch for
You are putting retirement capital at business risk — if the business struggles, those funds are exposed. ROBS carries setup costs and ongoing compliance and administration requirements (the C-corp and plan must be maintained properly). This is a structure to enter with eyes open and professional guidance, not a loophole.
Common Questions
Questions about robs (401k rollover)
Want help mapping funding to your situation?
Thirty minutes. No pitch. We will talk through what concepts fit your capital and how funding usually comes together.