Hey Searchfunders,

I've been considering a RollOver for Business Startup (ROBS) plan to fund a significant portion of my equity infusion. Basically you roll over your 401k funds into a newly established 401k plan that buys shares in the C Corp you create to purchase the target company. This allows you to use all of your 401k funds rather than taking an early withdrawal and paying the taxes/penalties. See companies like guidant financial or benetrends for additional info..

The funds in my 401k could put me in a position to purchase a business without the need for outside investors. However, the company needs to be a C-Corp as long as the 401k is invested in it, so they'll be a taxation hit. Over time I can purchase the shares back from the 401k and then change the corporate structure, but that will take several years and drain funds that could otherwise be reinvested, limiting the growth of the company. In the end, there is a fair amount to consider.

Does anyone out there have experience with these ROBS plans, thoughts on the tradeoffs, or additional considerations?