In this chapter, you’ll learn exactly how a Rollovers for Business Start-ups (ROBS) provider goes about setting up your structure. We can only speak to Guidant’s process – other companies may operate differently.
Become Qualified with a Coordinator
Your first interaction with a Guidant team member comes after you’ve indicated you would like to be contacted, usually through a referral or online form. For this example, let’s use Scott, a five-year veteran of Guidant. Scott’s job is to find out what your story is and whether you qualify for ROBS or another form of business financing. He’ll ask basic questions like what type of business you’re interested in, the amount of eligible retirement funds you have, your age, whether you have a business partner or spouse you’ll be working with, etc. This is all to determine what the best next step is for you.
Once Scott has determined you likely qualify for ROBS, he will schedule you for a conference call with one of our Financial Consultant experts.
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Go In-Depth with a Financial Consultant
A member of our Financial Consultant team will call you at a pre-arranged time. Let’s say you have a call with Keith, a twelve-year Guidant veteran and our very first employee. Keith and the rest of the team are absolute ROBS experts – they know the ins, outs and everything in between of this complex product. Before your call, Keith has read through the detailed notes Scott took and is familiar with your situation. He will ask a few clarifying questions before walking you through how ROBS works and why each element is important. This conversation is as high-level or detailed as you want it to be, and if you decide ROBS isn’t right for you, Keith can also speak to the other financing options Guidant offers, like business loans.
Keith will ask in-depth questions to make sure ROBS is a good option for your situation. This is also your opportunity to ask anything you want to know: how does your specific situation work with ROBS? What about the spouse/family member/child you’re going into business with? How does ROBS work with your industry? Every question you have, he’ll answer.
Keith will also walk you through our one-time ROBS setup fee and the monthly payment for the upkeep, continuous audit protection and support of your new 401(k) plan. (In the next chapter, we’ll discuss the annual requirements of ROBS and the value of an experienced plan administration team.)
When you are confident that ROBS is the way you want to finance your business, Keith will send a contract that outlines exactly what each party is responsible for as we move forward with your rollover. This is also when the time you’ll enter your payment information for your rollover fee. You then sign and return the secured electronic document to Keith.
Legal Team Review
Keith sends your contract directly to Maria, a member of our experienced Legal team. Maria will go page-by-page through your contract and the notes from Scott and Keith to ensure your transaction meets the each of the compliance requirements we discussed in Chapter 1. This is a level of due diligence that we use to maintain the highest quality in our ROBS transactions.
Finance Team Set-Up and Payment
Once Maria has completed her compliance review, she sends your contract to a member of our Finance team – let’s say Alejandro. Alejandro will use the information in your contract to set up your account in our accounting software and sync it with your existing account in our account management software. Alejandro will then add your payment information and charge your one-time setup fee. You will immediately receive an email receipt letting you know the amount we’ve charged and the payment information used. Don’t worry – we never charge your credit card without your explicit authorization.
Setting Up Your Corporation with the Fulfillment Team
At the same time Alejandro is working on your account in Finance, Mary or one of her Fulfillment team members will personally walk you through the process of setting up your corporation. This can be a complex process with a lot of variables, but Mary and the rest of her team are experts in this field.
The first step to setting up your corporation is to log into our Client Portal, where you’ll provide the necessary information Mary needs to move forward. You will then be assigned to an Outside Legal Counsel. “But wait,” you ask, “Guidant’s Legal team has already reviewed my account. Who is this new person?” Excellent question! We pay for you to meet with a non-Guidant attorney who represents you and your company’s best interests (not Guidant’s) and ensures the funding of your company is completed in compliance with IRS regulations. This is yet another layer of security to ensure your ROBS structure is set up and operated correctly.
Simultaneously, we’ll move forward with the incorporation process. Mary will create the Articles of Incorporation and Resident Agent Consent forms, if required by your state. After you sign these forms in the Portal, Mary then creates the two tax ID application forms your corporation and 401(k) plans will need. You’ll sign and submit these in the Portal as well.
Once this is accomplished, Mary will walk you through your plan options and gather your choices. She will then prepare your 401(k) Plan Adoption Agreement and Plan Administration Agreement. The 401(k) Plan Adoption Agreement (PAA) finalizes the setup of your 401(k) plan, while the Plan Administration Agreement is the contract that lines out the services we provide to keep your plan in compliance with the IRS – in other words, the agreement that makes you a Guidant Plan Administration client. (We’ll cover what exactly “plan administration” entails in the next chapter.) The PAA also has a section to enter payment information for your monthly fee. You are automatically enrolled in auto pay, but you may elect to submit monthly one-time payments or mail a check instead. If you have any questions, Mary will happily walk you through each section of this contract.
Now that your corporation is established, Mary will send you the appropriate documents and instructions for opening your new 401(k) plan and corporate bank accounts. She’ll refer you to banks that are experts in opening these accounts in the appropriate way. You will then reach out to your original retirement plan custodian and formally request the movement of your funds to your new 401(k) account (it’s importance to note Guidant never has access to your retirement funds at any time during the rollover process).
When Mary receives the signed Plan Adoption Agreement and Plan Administration Agreement, she will email you a zip file containing your finalized corporate and 401(k) plan documents. You’ll then have a second call with your Outside Counsel to double check and cover any additional questions. At this point, you’ll complete the transfer of funds from your 401(k) plan bank account into your corporate bank account in order to purchase stock in your new company. You’ll also complete the Corporate Resolutions and Stock Transfer Ledger in the Portal documenting these transactions.
You’ll then send us completed copies of the Stock Transfer Ledger, 401(k) plan bank account statements showing the rollover transaction and corporate bank account statements showing the stock purchase deposit. At this point, your funds are rolled over and your business is funded!
A member of our Client Success team will then personally transfer you from Mary to our Plan Administration account representatives. This team is responsible for keeping your plan in compliance with the IRS and DOL, and will be your point of contact for the duration of your time as a Guidant client. Keep reading to learn all about plan administration and why it’s important.