> ## Documentation Index
> Fetch the complete documentation index at: https://docs.talcottforge.com/llms.txt
> Use this file to discover all available pages before exploring further.

# ROBS Eligibility

> Find out if you qualify for ROBS 401(k) business funding.

You qualify for ROBS if **all** of the following are true:

<Steps>
  <Step title="You have at least $50,000 in eligible pre-tax retirement funds">
    **Eligible account types:**

    * Traditional 401(k)
    * Rollover IRA
    * Traditional IRA
    * SEP-IRA
    * SIMPLE IRA
    * 403(b)
    * 457

    **Not eligible for ROBS rollover:**

    * Roth 401(k)
    * Roth IRA

    <Note>
      Only **pre-tax** retirement funds can be rolled into a ROBS structure. Roth accounts have already been taxed and use a different distribution mechanism.
    </Note>
  </Step>

  <Step title="Your retirement funds cover at least 50% of your funding gap">
    The **funding gap** is the difference between your total capital needs and any cash you plan to invest personally.

    **Example:** If you need \$200,000 in capital and have \$50,000 in personal cash, your funding gap is \$150,000. You'd need at least \$75,000 in eligible retirement funds (50% of \$150,000).

    If your retirement funds can cover the full calculated gap, the ROBS structure may cover the primary capitalization need. You still need alternative funding sources or reserves outside the rollover for expenses and obligations that should not be funded from plan assets. If retirement funds cover 50–99% of the gap, you may still qualify but will need to supplement with other capital sources.
  </Step>

  <Step title="You will be a working owner and employee">
    ROBS requires you to be a **bona fide W-2 employee** of the C-Corporation. You must be actively working in the business, satisfy the plan's service requirements, maintain records that support your service, and receive reasonable compensation for services performed.

    <Warning>
      This is not a passive investment structure. The founder must be a working owner of the company and receive reasonable compensation. Not paying yourself a salary creates its own compliance issues.
    </Warning>
  </Step>

  <Step title="Your business will be structured as a C-Corporation">
    ROBS requires a C-Corp because only C-Corporations can issue stock that a 401(k) plan can purchase. LLCs, S-Corps, and sole proprietorships do not qualify.

    If you haven't formed your entity yet, that's fine - Nexus coordinates C-Corp formation as part of the setup process.
  </Step>

  <Step title="The company will operate as an active business">
    The ROBS structure depends on the C-Corporation qualifying as an operating company. Passive investment vehicles and companies that do not conduct active business operations are not a fit.
  </Step>
</Steps>

## Quick Eligibility Check

| Requirement               | Minimum       | Your Status                         |
| ------------------------- | ------------- | ----------------------------------- |
| Eligible retirement funds | \$50,000+     | Check your most recent statement    |
| Funding gap coverage      | 50%+          | (Capital needed − Cash available)   |
| Working owner commitment  | Yes           | Bona fide W-2 employee; not passive |
| Entity type               | C-Corporation | We help with formation              |
| Operating company status  | Required      | Active business operations          |

## Edge Cases

<AccordionGroup>
  <Accordion title="I have funds in multiple retirement accounts">
    You can combine funds from multiple eligible accounts. Each account rolls over separately into the new 401(k) plan. The \$50,000 minimum is based on your **total** eligible funds across all accounts.
  </Accordion>

  <Accordion title="I have outstanding loans against my 401(k)">
    Outstanding loans reduce your available balance. If your current 401(k) balance is \$80,000 but you have a \$25,000 loan, your eligible funds are \$55,000 (the vested amount minus the loan). Loan balances must typically be repaid or offset during the rollover.
  </Accordion>

  <Accordion title="I'm not sure if my account allows in-service rollovers">
    If you're still employed at the company sponsoring your current 401(k), you may need to check whether the plan allows **in-service rollovers**. Many plans restrict rollovers until you separate from the employer. If you've already left that employer, this isn't an issue.
  </Accordion>

  <Accordion title="My retirement funds are less than $50,000">
    Below \$50,000, ROBS typically isn't cost-effective given the setup and ongoing administration fees. You may want to explore SBA microloans, personal savings, or other funding options.
  </Accordion>
</AccordionGroup>

<Card title="Start Your Application" icon="rocket" href="https://nexus.talcottforge.com/onboard/robs">
  Ready to proceed? Start the ROBS eligibility screening.
</Card>