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Terminating ROBS / Rollover to IRA


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Guy bought a franchise with a ROBS 401k and wants to terminate it.  Can the stock get rolled over to an IRA? I think not, because if it could, there would be no such thing as a ROBS you would just do it from an IRA.  I thought the whole point was to take advantage of the employer securities exemptions available in a 401k plan.  Any specific sites (cites??) you can provide would be appreciated!

Austin Powers, CPA, QPA, ERPA

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I always thought the problem was the PT issue.

In particular it is the self-dealing issue.  With IRAs you can't be the top dog in the company like you can with a 4k plan.

See this article


I didn't find anything in writing newer or more detailed.  Other then the IRS website that does say you can't self deal. 



Or put another way you can't set your own salary for example with an IRA owned company but you can with a 4k owned plan. 

See: http://www.journalofaccountancy.com/issues/2000/apr/thedosanddontsofirainvesting.html


Hope that helps get you moving in the right direction.

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You can't be the key employee and key investor in the business. You can't own more than 50 percent of the business in which you invest, and you can't have a controlling interest in the company. Basically, someone else has to have the right to hire or fire you. The IRS wants to make sure you aren't "self-dealing," or moving retirement funds in a way that might benefit you in the present through a salary or other immediate payments.

This seems to be the key here, from your first article.  Thanks!

Also from the regs, I assume this is the relevant stuff:

c) Prohibited transaction

(1) General rule

For purposes of this section, the term "prohibited transaction" means any direct or indirect—

(D) transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a plan;

(E) act by a disqualified person who is a fiduciary whereby he deals with the income or assets of a plan in his own interests or for his own account; or

(2) Disqualified person

(E) an owner, direct or indirect, of 50 percent or more of—

(i) the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of a corporation,

(ii) the capital interest or the profits interest of a partnership, or

(iii) the beneficial interest of a trust or unincorporated enterprise,

Austin Powers, CPA, QPA, ERPA

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  • david rigby changed the title to Terminating ROBS / Rollover to IRA

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