ROBS: Rolling Over Your Retirement to Start a Business

Dear Exit Wealth® Members and Friends,

For you dreamers out there—certain you’ve got the perfect business plan if only you had the money to get it started—you very well may have the money you need… sitting quietly in your retirement account. And there’s a legitimate IRS-recognized strategy to leverage those funds: it’s called a ROBS, short for Rollover as a Business Startup.

Here’s the basic idea: you form a new C-corporation, create a qualified retirement plan under that company, and roll your existing 401(k) or traditional IRA funds into the new plan. That plan, in turn, purchases stock in your company—essentially investing your retirement money directly into your new business. The cash infusion can then be used for startup costs, buying equipment, purchasing an existing business, or even launching a franchise.

Unlike taking a loan or early withdrawal, a ROBS doesn’t trigger taxes or penalties. It’s a way to fund a venture debt-free, using money you already have, while retaining full ownership and control. For entrepreneurs who don’t want to rely on banks, outside investors, or personal credit, this can be a game-changer.

That said, it’s not a casual weekend project. The IRS recognizes ROBS as legitimate—but they also keep a close eye on them. The setup requires compliance with ERISA regulations, annual filings, and careful plan administration. You’ll need a good advisory team such as your friends at Exit Stage Left and Exit Wealth Advisors—experienced legal, tax, and retirement professionals—to keep it clean and compliant.

When executed properly, ROBS can unlock freedom and opportunity—letting you invest in yourself! But like any investment, it carries risk: if your business struggles, those retirement dollars go down with the ship.

Still, for many successful entrepreneurs, a ROBS was the liftoff moment—the tool that turned a dream into a functioning, funded enterprise. If your plan is solid and your conviction is strong, this could be your best on-ramp to business ownership… without borrowing a dime.

– Justin Farmer, Founder & Chief Executive Officer | Exit Wealth Advisors

Emmy-winning broadcaster providing financial analysis to media across the country

All opinions expressed in this newsletter is for general informational purposes and constitutes the judgment of the author(s) as the date of the newsletter. The opinions and views expressed by the author are personal and based on economic or market conditions at the time of publication. Actual economic or market events may turn out differently than anticipated. Nothing in this material is intended to serve as personalized investment, tax, or insurance advice. These opinions are subject to change without notice and are not intended to provided specific advice or recommendations for any individual. The material has been gathered from sources believed to be reliable, however Exit Wealth cannot guarantee the accuracy or completeness of such information, and certain information presented here any have been condensed or summarized from its original source. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. As always, please remember investing involves risk and possible loss of principal capital and past performance does not guarantee future returns; please seek advice from a licensed professional.