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The situation is simple. Nowadays many people will roll their retirement funds (401k, 403b, IRA, etc.) into a ROBS account to self-fund a business. So imagine for a moment, you take out retirement funds, self-fund a business. The business technically is 95% owned by your Retirement Accounts (call them 401k for simplicity) and 5% funded by you. As a business owner, you take an SBA loan, your bank of course never gives the correct amount of working capital, so you end up using personal credit cards, personal funds, etc. to help your business succeed. And in fact your business does succeed. But you are left in the unenviable position of being essentially bankrupt. But you have a business that has a great chance of success. You still have monies in your 401k funds. And to survive you need to consider personal (not business) bankruptcy as your debts exceed your ability to pay them. And you are not taking a salary from your business because it needs the working capital to continue growing successfully. So the question becomes, if this individual files for personal bankruptcy, and if there 401k retirement funds are protected, and it so happens that the 401k owns 95% of the business, is that business protected?? The question posed here - Is a 401k funded business (ROBS) protected or exempt from personal bankruptcy???

Hello! I have a small business and a plan with no assets set up as part of a ROBS from personal retirement funds. I've had a company file form 5500 each year. Almost 5 years in business and we do not have any assets in the plan--I don't take a salary, there haven't been any profits, the admin is too much for my small business. I would close the business but it does pay off the bank loan and my personal guarantee on the 10 year lease. A company that specializes in using personal 401K funds to start a business (ROBS) helped me set up and borrow from my retirement funds. The $150K I borrowed is likely gone given our current lack of profits and trend. The monthly fee to my company is a cost I need to verify whether it's necessary, if some shortened form (no census) would be acceptible and/or DIY. OR, if partnering with the same person each year would be a smoother process. However, finding anyone familiar with this kind of financial instrument has been difficult. Is filing the form 5500 necessary given the lack of assets? I've read less than $250K is not necessary to file. The company who files for me yearly always is puzzled but I still fill out a census of every employee, assign a value to company by best guess method. It's always someone different handling the filing than the last year, it takes several emails/phone calls to clarify that although we have revenue, we are either losing money or realizing less than 10K profit/year on 1 million in sales and I have no extra time to make a 401K part of employee benefits. The company I employ specializes in ROBS but the process seems too expensive for a once/year filing ($130/month + filing fees of another $150 or so). I need to streamline and although this let me start a business when banks weren't lending to small business, I've had to accept the $150k is gone. Apologies if this isn't the appropriate forum, I wear a lot of hats. I appreciate professionals weighing in on alternates or if staying the course is recommended. Trying to sever ties with the admin company got me several letters of gloom and doom from them. Any insight would be very appreciated.

To avoid the independent qualified public auditor opinion requirement for the Form 5500, does the fidelity bond need to cover 100% of an employer's non-publicly traded stock held within the plan, or can such stock be considered as a qualifying plan asset?