Thoughts on ROBS?

Question

Because I recently left a longtime employer, I will have the opportunity to roll out a 401(k) and a lump-sum pension. My CPA is vehemently opposed to a "rollover as business startup." I'm interested to hear other opinions about ROBS, both pro and con.

I've been a buy-and-hold investor for a decade and a half; now I'm interested in adding rehabs or other immediate-income activity. Access to the 401(k) money is not essential, but it might let me do more and do it faster.

Thoughts?

Mark Nolan · Answer

The rollover as business startup (ROBS) transaction is a viable option for those that don't have other financing options or don't want to go into debt. Because it is an investment option within the business financing 401k plan, you don't have to use all of your retirement funds to finance your own business.  It is never a good idea to invest all of you retirement funds in just one investment option (in this case your own business); therefore, investment diversification is always the best bet.

Jaime Raskulinecz · Answer

Lisa the IRS has a lot of issues with ROBS. There is a blog post with an article I wrote on the subject on my web site.  Otherwise, email me directly and I'd be happy to send it to you.

Bottom line, to do it within guidelines and correctly, you need an experienced private attorney who will also guide you through the ongoing intricacies. It's tricky.

Jaime

J Scott · Answer

Here is another thread from a couple years ago where I discuss my experience:

http://www.biggerpockets.com/forums/51/topics/6436...

Despite my follow-up post in that thread, I still wouldn't do it again today...

Terry Lewis · Answer

Hi Lisa,

Can you roll it over into a self directed IRA and put a portion into a Roth IRA, Then you can invest inside the retirement account. I know of investors killing it investing in notes.

Terry Lewis