In a nutshell, ROBS is a tax strategy that allows individuals with qualified retirement accounts to distribute funds (tax free) and rollover the funds to a start-up business. The details for the structure of the transaction are very complex and beyond the scope of this blog. However, anyone that is looking to use ROBS as a tool to fund their business should proceed carefully and make sure they are receiving competent advice. There are many rules that govern the transactions within ROBS and there are very big penalties at stake if the rules are not followed correctly. The IRS is aware of the complexity involved in these transactions and is targeting ROBS for more intense examination.
Nick S. Wold, CPA, MA