How to properly document a "Rollover as Business Startup" (ROBS) transaction to avoid taxes and fees to the IRS?

[trentmanderson]

1. Create a new C corporation, a common business structure.
2. Set up a company 401(k) plan for your new C corporation.
3. Roll your existing retirement funds into the new company 401(k) retirement plan.
4. The company 401(k) plan buys your C corporation’s stock.
5. The funds from the stock purchase can be used to operate your business.

In step 4 of this process, what documentation/forms are required by the IRS to document the purchase of the C-Corp stock after the funds have been withdrawn from the 401(k) retirement plan?

[dmertz · Accepted solution]

I won't address this because of the potentially abusive nature of ROBS:

https://www.irs.gov/retirement-plans/rollovers-as-business-start-ups-compliance-project

[trentmanderson]

Thank you for your consideration on the matter.

I understand the process can be complicated, and as the IRS report referenced in your reply points out, being compliant with regard to the rules of a ROBS transaction can be challenging.

That said, I will consult with my CPA to better understand the specifics of my situation.