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ROBS Basics

ROBS stands for Rollover for Business Startups. It lets a 401(k) plan invest in the stock of the company that sponsors it. In practice: you form a C-Corporation, the corporation sponsors a new 401(k) plan, eligible retirement funds roll into that plan through a direct rollover structure intended to preserve tax-deferred treatment, the plan buys C-Corp stock, and capital moves into the business without business debt or outside equity dilution.
A properly completed trustee-to-trustee rollover from an eligible retirement account into the new 401(k) plan is intended to preserve tax-deferred treatment and should not be subject to the early-withdrawal penalty. That treatment depends on the rollover, stock purchase, and ongoing plan operation being handled correctly.
The current Nexus ROBS structure uses a C-Corporation whose company-sponsored 401(k) plan can purchase qualifying employer securities. Nexus does not support LLCs, S-Corps, or sole proprietorships for this structure.

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Eligibility

Compatible pre-tax accounts are the usual fit: prior-employer 401(k), traditional or rollover IRA, SEP-IRA, SIMPLE IRA after the two-year period, eligible 403(b), and eligible governmental 457(b) plans. Nexus also supports an exclusive Roth 401(k) path. Multiple Roth 401(k)s may be combined with one another, but they cannot be mixed with pre-tax sources. Roth IRAs are not eligible.
ROBS generally works for U.S. founders who have eligible retirement funds, are forming or buying an active business through a C-Corporation, and will work full time as a bona fide employee of that corporation. It is not a passive investment structure.
The Nexus eligibility screen requires at least $50,000 in compatible eligible retirement funds. Below this threshold, setup and ongoing administration costs can become less efficient relative to the capital deployed.
You can start the ROBS process while still employed elsewhere, but you must be planning to work in the new business. If your current employer’s 401(k) does not allow in-service rollovers, you may need to wait until you separate from that employer to roll over those specific funds.
No. The eligibility screen and full application ask whether you have a U.S. Social Security Number but do not collect the full number. Nexus requests it later only when a specific filing or account-opening step requires it.

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Setup and Funding

A straightforward Nexus setup can often go from a complete application to a funded business in 2–3 weeks. This is an estimate, not a guarantee. State, IRS, custodian, and applicant response times can extend the process.
Nexus coordinates the core ROBS setup path: C-Corp formation, corporate governance setup, plan and trust setup, rollover coordination, capitalization support, and standard post-funding administration. You still operate the business and remain responsible for business decisions, plan fiduciary duties, compliance with plan and corporate requirements, and accurate information.
Yes. ROBS is commonly used for franchise purchases. The franchise fee is typically a known, documented amount, which can simplify the valuation and use-of-proceeds analysis compared with some acquisitions.
Yes, but acquisitions require additional scrutiny. An independent appraisal or valuation support may be needed to show that the 401(k) plan paid no more than adequate consideration for the C-Corp stock and that business funds were used properly.
A personal guarantee can create a serious prohibited-transaction risk. The result depends on the structure and facts, so obtain qualified ERISA counsel before signing any guarantee or financing arrangement involving the ROBS-funded company.

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Compliance and Administration

Yes. Nexus requires the founder to work full time as a bona fide employee of the C-Corporation. Compensation decisions should reflect the services actually performed, be reasonable, and be properly documented. Ask qualified counsel and your tax advisor about timing and amount for your facts.
Once the company has employees, the 401(k) plan has to be administered like a real employee benefit plan. That can include eligibility tracking, plan notices, contributions, nondiscrimination testing, and proper treatment of employees who become eligible to participate.
Form 5500 is an annual filing required by the Department of Labor and IRS for employee benefit plans. A ROBS plan generally files because the plan holds assets, including C-Corp stock. Nexus includes annual filing support as part of ongoing administration.
Yes. The ROBS 401(k) plan trust is a separate legal entity from the C-Corporation and requires its own Employer Identification Number. Nexus obtains the plan trust EIN from the IRS as part of plan setup.
In a ROBS structure, the 401(k) plan trust is the legal owner of the C-Corp shares. The plan purchases the shares directly so the transaction can qualify as a plan investment in employer securities. You do not personally buy the shares with retirement funds.
Prohibited transactions can create excise taxes, plan correction requirements, or worse outcomes depending on the facts. Common issues include personal guarantees, using plan assets for personal benefit, improper compensation, and transactions between the plan and disqualified persons. If you suspect an issue, address it quickly with qualified counsel or a plan professional.
Not for the same operating company in the ordinary ROBS setup. ROBS uses a company-sponsored 401(k) plan for a C-Corporation. A Solo 401(k) is designed for self-employed individuals with no eligible non-spouse employees. The structures serve different purposes and should not be layered casually.

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Business Outcomes

The 401(k) plan trust owns C-Corp stock, so business failure can reduce or eliminate the value of that plan asset. That is an investment loss inside the retirement plan, not a taxable distribution by itself. The company and plan still need to be wound down correctly.
If the C-Corp is sold, the 401(k) plan receives its share of sale proceeds based on the stock it owns. Those proceeds remain inside the plan until distributed or rolled over according to retirement-plan rules.

Check Your Eligibility

Start with the eligibility screening.