BACKGROUND: I am looking at putting together an internet business that will be structured as a C corp. When considering the best structuring of what could have a very high return on investment, I ran across an article in a financial publication discussing how retirement plans can be used for business startups.
QUESTION: From the look of the link above, a C corp is established
(already got an expert on that) and the shares are purchased by the retirement
account (likely a self-directed Roth 401K) and the business still operates and
files taxes as usual but any dividends or capital gains that go to shareholder
goes to the 401K plan that holds the shares. Do you see any issues with
this?
ANSWER: We can schedule a time to talk more about this next week
with our Harvard-law trained attorney,
but here is a quick breakdown.
The IRS refers to this arrangement as Rollo Over Business Startup (ROBS). We refer to it as the 401k SelfStarter Plan, and Benetrends refers to it as the Rainmaker.
It only works under a C-Corp arrangement, and Roth 401k funds MAY NOT BE USED.
Below is the link to this product on our website.
The IRS refers to this arrangement as Rollo Over Business Startup (ROBS). We refer to it as the 401k SelfStarter Plan, and Benetrends refers to it as the Rainmaker.
It only works under a C-Corp arrangement, and Roth 401k funds MAY NOT BE USED.
Below is the link to this product on our website.
Thanks,
Scott in
Arizona
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