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Ledge Accounting Serves Hundreds of ROBS Plan Franchise Owners
Starting a Business with Your 401(k)
Starting a business takes a lot of money. Most people don’t have enough saved up, so they borrow money or ask others to invest. But that means they end up in debt (which means they owe money).
There’s another way called a ROBS 401(k) plan that lets you use your retirement savings to start your business without borrowing or going into debt.
Who We Serve
Who are our clients?
We serve the following sectors of the franchising industry.
FAQ
A few common questions:
What is a ROBS 401(k) Plan?
ROBS stands for Roll-Over as Business Start-Up. It lets you take money from your 401(k) (your retirement savings) to help you buy or start a business — and you don’t get charged taxes or penalties like you normally would for taking money out early.
Why Use a ROBS Plan?
Usually, if you take money from your retirement account early, you have to pay extra taxes and fees. But with ROBS, you can use that money to start a business without paying extra.
How Does ROBS Work?
Here’s what you do:
- Start a C Corporation – This is a type of company that can sell shares (small pieces of the company).
- Create a special 401(k) plan – This is a new retirement account just for your business.
- Move your old 401(k) money – You roll it into the new 401(k) account.
- Buy shares in your company – Your new 401(k) uses that money to buy part of your company.
- Use that money for your business – Now you can use it to buy a franchise, start a business, or grow an existing one.
With ROBS, you use your own money to invest in your own future — without taking on debt. Just be sure to get help from professionals to do it the right way!
Are ROBS Plans Legal?
Yes, ROBS (Rollover as Business Start-Up) plans are fully legal. They were established under the Employee Retirement Income Security Act of 1974 (ERISA) to give individuals greater control over how they invest their retirement funds.
While legal, ROBS plans require strict compliance with IRS and Department of Labor regulations. In 2008, the IRS officially acknowledged ROBS as a valid business financing method but emphasized the importance of following all rules to avoid penalties. Many of the issues they observed came from business owners who failed to meet compliance standards.
To ensure your ROBS arrangement is set up and maintained properly, it's critical to work with professionals who understand the process. Ledge Accounting offers expert guidance on ROBS compliance, along with comprehensive support including bookkeeping, tax planning, and ongoing financial services—giving you the confidence and clarity to build your business the right way.
While legal, ROBS plans require strict compliance with IRS and Department of Labor regulations. In 2008, the IRS officially acknowledged ROBS as a valid business financing method but emphasized the importance of following all rules to avoid penalties. Many of the issues they observed came from business owners who failed to meet compliance standards.
To ensure your ROBS arrangement is set up and maintained properly, it's critical to work with professionals who understand the process. Ledge Accounting offers expert guidance on ROBS compliance, along with comprehensive support including bookkeeping, tax planning, and ongoing financial services—giving you the confidence and clarity to build your business the right way.
Contact us
Have questions about your bookkeeping and how to fix it?
Whether you're seeking clarification on our services or questions related to taxes, please feel free to reach out. Looking forward to hearing from you!