One of the understandable concerns about using the Rollover for Business Startup (ROBS) strategy is what it does to your long-term retirement security. Rolling over a significant portion of your retirement savings into a business means those funds are no longer compounding in a diversified investment portfolio. The good news is that with a deliberate plan with Business Funding Trust, rebuilding retirement savings is entirely achievable — and the business itself can be a powerful tool for doing so.
The first and most direct path to rebuilding is through the corporate 401(k) plan that was established as part of your ROBS arrangement. As a business owner and employee of your C corporation, you can contribute to this plan annually. Contribution limits for 401(k) plans allow for meaningful savings — and as a business owner, you may also be able to make employer contributions that increase the total amount you can set aside each year.
What You Need to Know
A successful business also builds equity over time. If you eventually sell the business, the proceeds can be a significant source of retirement income — in some cases exceeding what a traditional investment portfolio would have generated. Business ownership, when successful, can be its own form of retirement planning.
The key is to be intentional from the beginning. Do not treat ROBS as simply depleting your retirement savings for a business venture. Treat it as a reallocation of retirement capital into a business asset — and build a plan for how you will replenish and grow your retirement position over the years that follow.
Ready to Take the Next Step?
Ready to explore whether your 401(k) can fund your entrepreneurial dream? Contact Business Funding Trust today for a free consultation. Our specialists can walk you through your options, help you understand the process, and lead you to a successfully funded business.
