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ROBS (Rollover for Business Startups) is a funding arrangement that uses eligible retirement savings to capitalize a business through a company-sponsored retirement plan and a direct rollover. When structured and operated properly, the arrangement is intended to preserve the source funds’ tax character while avoiding business debt and outside investors. Nexus is built for founders who have eligible retirement assets and intend to own and actively operate a new business, acquisition, or franchise.

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How ROBS Works

1

Form a C-Corporation

The current Nexus ROBS structure uses a new C-Corporation whose stock can be purchased by the company-sponsored 401(k) plan.
2

Establish a 401(k) Plan

The C-Corporation adopts a 401(k) plan that permits investment in employer stock (the company’s own shares).
3

Roll Over Retirement Funds

You request direct rollovers from eligible existing retirement accounts into the new company’s 401(k) plan. Nexus supports a compatible pre-tax path or an exclusive Roth 401(k) path; Roth IRAs are not eligible.
4

Purchase Company Stock

The 401(k) plan uses the rolled-over funds to purchase stock in the C-Corporation at the documented transaction value.
5

Fund the Business

The C-Corporation now has the stock sale proceeds as working capital. You operate the business as a working owner and W-2 employee.
ROBS arrangements rely on existing provisions of the Internal Revenue Code and ERISA governing qualified retirement plans and investments in qualifying employer securities. IRC 4975(d)(13) and ERISA 408(e) provide exemptions for the acquisition of qualifying employer securities by an eligible individual account plan when done for adequate consideration and without commission. The IRS has not prohibited ROBS arrangements, but it has published examination guidance in Memo 2008-01-021 identifying audit considerations and compliance risks. The important point is execution: the C-Corp, 401(k) plan, rollover, stock purchase, and ongoing administration need to be structured and operated properly.
ROBS can present investment and compliance risk. Retirement funds invested through a ROBS structure are tied to business performance and may lose value if the business fails. Compliance errors can trigger a 15% excise tax on prohibited transactions (IRC 4975), with an additional 100% tax if the transaction is not corrected within the taxable period.

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Who is ROBS For?

ROBS is designed for founders who:
  • Have $50,000 or more in compatible eligible retirement savings
  • Plan to be a working owner and employee of the new business
  • Are starting a new business, buying an existing one, or purchasing a franchise
  • Want capital without taking on debt or diluting ownership

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Where Nexus Fits

ROBS is not just a funding mechanism. It creates an operating structure with a C-Corporation, a company-sponsored 401(k) plan, plan trust assets, corporate governance, and annual administration requirements. Nexus coordinates the setup work and provides standard ongoing administration support: C-Corp formation, 401(k) plan and trust setup, rollover coordination, capitalization support, compliance deadline tracking, annual filing support, required plan maintenance, valuation coordination, and entity administration support.
Talcott Forge prepares, coordinates, and administers key parts of the structure. Talcott Forge does not act as plan fiduciary or provide legal, tax, accounting, investment, or fiduciary advice. The founder remains responsible for operating the business as a working owner, making fiduciary decisions prudently, maintaining proper separation between personal, corporate, and plan assets, keeping the corporation in good standing, and avoiding prohibited transactions.

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