Allows individuals to use existing retirement funds to purchase a business without incurring tax penalties.

For over a decade, Guidant’s 401(k) business financing service has helped entrepreneurs fund the small businesses and franchises of their dreams. Through an arrangement called Rollovers for Business Start-ups (ROBS), your clients can invest funds from an eligible retirement account into a business without taking a taxable distribution.

This financing vehicle not only helps your candidates buy businesses, but it can be used for recapitalization purposes as well. It’s also common for clients to use their retirement assets as the down payment on a business loan, allowing them to preserve their liquid cash for later use.
401k business financing process

It’s simple and easy

With Guidant at the helm, using retirement funds to buy a business can be easy. Our team of experts has helped more than 10,000 entrepreneurs in all 50 states invest more than $3 billion into small businesses and franchises. We strive to make the journey to financing straightforward for both you and your candidates.

 

Requirements

  • Clients’ retirement funds must be rollable (meaning they can be transferred from one retirement account into another tax-deferred account).
  • Individual accessing the retirement funds must be actively engaged in the business they purchase.
  • Minimum of $50,000 available in rollable retirement funds.

Most plans qualify

  • 401(k)
  • 403(b)
  • Traditional IRA
  • Keogh
  • TSP
  • SEP

Benefits

A Quicker Path to Profitability

Starting a business debt-free lowers overhead and eliminates risking home equity. Without loan interest to pay, your client can make money sooner rather than later.

Tax-deferred Savings

Since your client won’t have to take a taxable distribution using this structure, they can save more for retirement.

Confident Investing

Unlike the stock market, this is an investment your client can control. Essentially, they’re investing in themselves — and we’re betting that’s a good risk to take.

Peace of Mind

This tried-and-true structure is a fast, legal funding option that’s been in use since the Employee Retirement Income Security Act became a law in 1974.


Rollovers as Business Start-ups FAQs

Is it legal?

Absolutely. The Employee Income Retirement Security Act of 1974 (ERISA) passed the responsibility of retirement saving from the employer to the employee.

What are the legal requirements?

Our Senior Counsel Joe Wishcamper hosted a presentation that addresses all of the legalities associated with ROBS on Lawline.com. This presentation is free once you register for an account, and it counts as continuing education credits.

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