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Are ROBS Plans Cost-effective?

October 25, 2022


  • ROBS plans allow for entrepreneurial investment through retirement funds without early withdrawal penalties
  • The price of a ROBS plan is determined by the plan, provider, and specific services required
  • ROBS Pooled Employer Plans are more cost-effective, however, a ROBS 401(k) allows for more customization

ROBS Plan: The Basics

ROBS plans allow business owners to use the money in their retirement accounts to fund their businesses without having to deal with the taxes and penalties associated with an early withdrawal. This 8-step process transfers your retirement plan funds to an account that allows stock investment in your company. This will enable you to use that stock investment to begin or expand your business.

This tool is great for those who need an extra stimulus without paying back loans or delaying their business venture.

ROBS Pooled Employer Plan

Pooled Employer Plans are a recent advancement that allows multiple businesses of unrelated industries to be supported under the same plan. Because of this, each business receives similar features. In addition, much of the administrative burden is offloaded to the plan provider, freeing up more time in each business' schedule.

This does not mean that all customization capabilities are taken away. There are still ways for each business to make the plan unique through certain investment and provision customization.

Under a Pooled Employer Plan, each business doesn't need to pay for every retirement plan service cost. Instead, many of the pesky fees are shared among employers, reducing, and in some cases, eliminating select costs. These shared costs include:

  • Audits
  • Plan document
  • Plan preparation
  • Compliance
  • Form filing
  • And more…

Plan providers are willing to offer a pooled employer option for your ROBS plan so you can use your retirement funds to invest in your business venture while sharing the costs of starting and maintaining a plan with other businesses.

ROBS 401(k) Plan

A ROBS 401(k) custom plan offers the flexibility to build a plan from the ground up and choose the investments and benefits that your staff receives. These benefits can range from:

  • Profit-sharing contributions
  • Tax deductions
  • Participant loans
  • And more.

The ability to customize plan features means the plan is built for your specific needs and the desires of your company and employees. In addition, these features can be changed at any time meaning it is wholly adaptable as your business grows.

Your ROBS Solution

Which Plan is Right for Me?

Businesses who are looking for a simple, effective, and low-cost retirement option, don’t need to look further than the ROBS Pooled Employer Plan.

However, if you already have a specific vision for your employee benefits and retirement plan program, or you are looking to build a plan from the ground up, then a ROBS 401(k) might suit your needs better.

However, because each business is different,  choosing which plan to go with may not be cut-and-dry. If you are looking for more details on the plans we have described, don’t hesitate to reach out. We would love the opportunity to help your business succeed, even if it’s not with us.

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