In a nutshell, it's a way to use your retirement savings to fund a business, tax and penalty free.
ROBS stands for Rollover for Business Startups.
The method is sometimes also called "401k business financing" because it is commonly used with 401k retirement accounts.
Rollovers as Business Startups (ROBS) is a business financing solution that uses retirement savings to fund a new or existing business without withdrawal or tax penalties.
“Rollover” refers to the process of moving retirement funds from one 401(k) account to the new company’s 401(k) account, and then from the company’s 401(k) account to the company’s checking account.
A ROBS isn’t a business loan nor a loan from your 401(k), which means there are no interest payments to make or debt to repay.
It’s a way for you to leverage retirement funds to provide capital to your business.
A ROBS can also be used to purchase or invest in an existing business or franchise. A C corporation (C-corp), which allows for shareholders, is established, and a new 401(k) plan is set up.