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ROBS funding uses direct rollovers from eligible retirement accounts into the new company-sponsored 401(k) plan. The plan trust then purchases company stock, and the corporation receives the purchase proceeds as working capital.

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Funding path

1

Prepare the accounts

Open the C-Corp bank account and the designated custodial account for the 401(k) plan trust. Nexus provides the account-title and plan information needed for setup.
2

Request direct rollovers

Contact each sending plan administrator or custodian and follow its direct-rollover process. Funds should move to the receiving plan, not to you personally.
3

Track each transfer

The Nexus funding dashboard tracks multiple sources separately as custodians process them.
4

Confirm capitalization

After the expected rollover funds arrive, confirm the amount that will be used for the stock purchase and complete the remaining dashboard actions.
5

Fund the company

The plan trust purchases C-Corp stock at the documented transaction value. The corporation receives the proceeds for legitimate business use.

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Compatible funding designations

Nexus supports two separate paths:
  • Pre-tax: compatible eligible pre-tax accounts may be combined
  • Roth: one or more Roth 401(k) accounts may be combined only with other Roth 401(k) accounts
The paths cannot be mixed. Roth IRAs are not eligible, and the approved designation remains fixed throughout funding. Common pre-tax sources include former-employer 401(k) plans, traditional and rollover IRAs, SEP-IRAs, SIMPLE IRAs after the applicable two-year period, eligible 403(b) plans, and eligible governmental 457(b) plans. Actual eligibility depends on the source plan, vested balance, loan status, and distribution availability.

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Tax reporting

The sending plan or custodian generally reports a retirement-plan distribution on Form 1099-R. Form 5498 applies when the receiving account is an IRA; a receiving qualified 401(k) plan does not issue Form 5498 for the rollover. Confirm the reporting on your forms and tax return with your tax advisor and the current IRS instructions for Forms 1099-R and 5498.
A properly completed direct rollover is intended to preserve the tax character of eligible source funds. Mistakes in the rollover, stock purchase, or ongoing plan operation can change the result.

See the setup timeline

Review the steps and variables that affect completion time.