After Funding
Once your rollover is complete and your C-Corporation has capital, a new phase begins: operating your business compliantly under the ROBS structure.Immediate Next Steps
Open a Business Bank Account
Your C-Corporation needs its own bank account — completely separate from personal accounts and the 401(k) plan trust. This separation is critical for compliance.
Set Up Payroll
As a full-time employee of the C-Corporation, you must be on payroll with a reasonable salary. This is not optional — the IRS expects W-2 employment.
Ongoing Compliance Obligations
Annual Requirements
| Obligation | When | What’s Involved |
|---|---|---|
| Form 5500 Filing | Annually (7 months after plan year-end) | Required filing with the DOL for 401(k) plans with assets |
| Plan Valuation | Annually | Fair market value of plan assets (including the C-Corp stock) |
| Prohibited Transaction Review | Quarterly (recommended) | Verify no prohibited transactions have occurred |
| Board Meeting Minutes | At least annually | Document corporate governance decisions, especially compensation |
What Talcott Forge Monitors
- Compliance deadlines — tracked and surfaced in your dashboard
- Form 5500 preparation — data collection and filing support
- Quarterly admin reviews — covered by your ongoing admin fee
Common Compliance Pitfalls
Commingling funds — Never mix personal funds with corporate funds or plan trust funds. Maintain separate accounts. Unreasonable compensation — Your salary must be at market rate for your role and industry. Paying yourself significantly above or below market raises red flags. Personal guarantees — Never personally guarantee a loan on behalf of the business. Under Peek v. Commissioner, personal guarantees on business debt constitute a prohibited transaction that disqualifies the entire plan. Forgetting Form 5500 — This annual filing is required for 401(k) plans with assets. Missing it triggers automatic penalties. Self-dealing transactions — The C-Corporation cannot lease property from you, lend money to you, or engage in transactions that benefit you at the plan’s expense.Learn About Prohibited Transactions
Understand what you can and cannot do under ROBS.