Reply To: ROBS (Rollover for Small Business)

[Brian]

Guidant was awesome to deal with. You will have a rep assigned to you to guide you through the process and it seems like they have an answer for every question you would have. In terms of the steps John C outlined — those are the steps but Guidant is holding your hand every step of the way and you only work with companies that understand ROBS. (e.g when the funds are held in a bank during the time between the 401k getting funded and when it moves to your business bank accounts)

The Guidant service costs $5k up front to set up the 401k plan that will fund your business. After the plan is active, the monthly admin costs are $139 per month. Also note that when you set this up you can choose to offer a 401k benefit to your employees.

They set up 2 entities – 1 is the 401k that funds the business, and the other is the C-corp that runs the business.

Whatever $ you take out of your existing retirement plan goes in to that 401k that was set up and buys shares in the business It is set up that you could also put other money in as well as bring in $ from outside investors…everyone would own the % of the company aligned with the initial investment and share price.

You do sacrifice some of the things you can benefit from in doing an LLC b/c in terms of personal expenses being run thru the business. But ultimately i decided I would bet a piece of my retirement that I could get better returns on a laundromat than I would leaving it invested in the market.

Selfishly, if you go the Guidant route, I’d love for you to drop my name in the referral field b/c I can get a years worth of admin fees for free. But I would tell you the same thing regardless of whether that incentive was there or not.