Guidant put out this great piece on busting the myths behind ROBS.
Using Rollovers for Business Start-ups (ROBS) to finance a business isn’t new, but it is unfamiliar to many. As a result, there are a lot of myths swirling around about the use of ROBS that may be stopping would-be entrepreneurs from chasing their dreams.
ROBS involve using money from an eligible retirement account to finance the purchase of a business or franchise. To make a long story short, a corporation is formed, and that corporation then sponsors a 401(k) plan. Funds are rolled from an existing retirement account into the new 401(k) without triggering a taxable distribution. This new 401(k) purchases (or invests in) shares of the corporation, which can then purchase a business or franchise.
In essence, ROBS allow you to take control of your finances and invest in yourself. Here’s the truth behind the most common ROBS myths: