Money & Financing
Can I use retirement funds?
Yes — through a structure called ROBS (Rollovers as Business Startups).
Practical Explanation
ROBS lets you roll over a 401(k) or IRA into a new C-corp that owns the business, without triggering taxes or early-withdrawal penalties. It's IRS-recognized but technical — you'll need a specialist provider to administer it. The funds become equity in the business, not a loan.
Real-World Example
A buyer rolls $150,000 from a former-employer 401(k) into a ROBS structure to fund the equity injection for a $1.2M SBA-financed acquisition.
Typical cash required
Up to the balance of your eligible retirement account.
Experience required
Same as the underlying deal.
Advantages
- ✓No tax or penalty hit on the rollover
- ✓Funds are equity, not debt — improves loan ratios
- ✓Pairs well with SBA financing
Risks
- !If the business fails, retirement savings are lost
- !Annual compliance costs ($1,000–$2,000)
- !Requires C-corp structure
Frequently Asked Questions
Is ROBS legal?
Yes — it's an IRS-recognized structure, but compliance is strict. Use a reputable ROBS provider.
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