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https:\/\/www.youtube.com\/watch?v=xReVyJKcHAs<\/a>\ufeff<\/span><\/iframe><\/p>\n We\u2019re seeing a significant demographic shift shaking up the small and middle-sized business (SMB) market. As Baby Boomers are aging and retiring, many are looking to sell their businesses, which represents <\/span>a significant opportunity<\/span><\/a> for would-be entrepreneurs to explore a chance at business ownership.<\/span>\u00a0<\/span><\/p>\n Finding the capital to buy or start a business is a critical first step. In our series on Rollovers as Business Start-ups (ROBS) for <\/span>starting or buying a business<\/span><\/a>,<\/span> we\u2019ve explored how ROBS provide access to cash flow, <\/span>tax advantages<\/span><\/a>, debt-free financing and <\/span>asset protection<\/span><\/a> benefits.<\/span>\u00a0<\/span><\/p>\n As a reminder, a ROBS strategy is a capital creation mechanism that <\/span>accesses your 401(k)<\/span><\/a> early, without any penalties. You can use the money from your 401(k) to invest in <\/span>a C corporation<\/span><\/a> that you will own and manage and may use to buy subsequent companies.<\/span>\u00a0<\/span><\/p>\n Many people ask, \u201cWhen I use a ROBS strategy, does my 401(k) have to own 100% of the C corporation?\u201d The answer is \u2018no.\u2019 The C corporation is an operating company that can be owned by other entities, including taxable entities or other retirement plans that you own.<\/span>\u00a0<\/span><\/p>\n One use of the ROBS rollover is known as the 80\/20 split. In this scenario, your 401(k) rollover can own 80% of the C corporation, while the other 20% is owned by another entity. The owner of the other 20% could be your Roth IRA.<\/span>\u00a0<\/span><\/p>\n A simple example of how the 80\/20 split works:<\/span>\u00a0<\/span><\/p>\n Let\u2019s say that 10 years later, you increase the value of the business tenfold and sell it for $1 million, yielding you a profit of $900,000.\u00a0<\/span>\u00a0<\/span><\/p>\n By using ROBS and having your Roth IRA own part of the new C corporation, you\u2019ve likely shielded yourself from $180,000 in capital gains.\u00a0<\/span>\u00a0<\/span><\/p>\n Creating a business ownership structure that includes <\/span>funds from qualified retirement plans<\/span><\/a>, like 401(k)s, Traditional IRAs, Roth IRAs and SEP IRAs, offers some key benefits:<\/span>\u00a0<\/span><\/p>\n In short, shielding assets from tax liabilities using a ROBS strategy can provide a <\/span>measure of lifelong wealth protection<\/span><\/a> for your spouse and future generations.<\/span>\u00a0<\/span><\/p>\n If you\u2019re interested in taking the next step with ROBS, S.J. Gorowitz Tax and Accounting Services would be pleased to offer you a consultation on your business plans and objectives. Please contact us at 770.740.0797 or email info2@SJGorowitz.com.<\/span>\u00a0<\/span><\/p>\n<\/div>\nROBS and Wealth Protection<\/span>\u00a0<\/span><\/h2>\n
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Benefits of the ROBS 80\/20 Approach<\/span>\u00a0<\/span><\/h2>\n
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