Frequently Asked Questions

Nexus 401(k) by Talcott Forge is a ROBS product that helps founders use eligible retirement assets to fund their own business. Nexus supports both the initial transaction and the ongoing responsibilities that come with a ROBS-funded business, including plan administration, compliance support, and annual maintenance.

ROBS, short for Rollover for Business Startups, is a structure that lets you use eligible retirement funds to capitalize a business through a direct rollover structure that preserves the funds’ tax-deferred treatment. You form a C-Corporation. The C-Corp sponsors a new 401(k) plan. You roll existing retirement funds into the new plan. The new plan buys C-Corp stock. Capital moves from the new plan into the C-Corp. When done properly, there is no taxable distribution, no early-withdrawal penalty, no debt. To learn more, see our ROBS checklist.

Yes. ROBS arrangements have been in use since the 1970s. They rely on existing provisions of ERISA and the Internal Revenue Code governing qualified retirement plans and investments in qualifying employer stock.

Nexus coordinates the setup and ongoing administration necessary to establish and maintain a ROBS-funded business. At launch, Nexus creates the C-Corp and 401(k) plan, coordinates funding, and documents the stock purchase. Once funding is complete, Nexus provides compliance support for the 401(k) plan and the C-Corp by managing the annual 401(k) testing, required filings, renewals, and private stock recordkeeping needed for you to keep the 401(k) plan compliant and the C-Corp in good standing. For a more detailed overview, see our pricing page.

Run the eligibility check. It takes a few minutes and helps you evaluate whether ROBS might fit your objectives and whether you meet the basic eligibility criteria before you commit to anything. If you qualify and want to proceed, Nexus walks you through the intake, forms the C-Corp, sets up the 401(k) plan, coordinates the rollover, and facilitates the funding transaction.

Most founders need at least $50K in eligible retirement funds for ROBS to make economic sense. Below that level, setup and annual administration costs consume too much of the capital. The economics become more attractive once the rollover amount exceeds $100K.

Traditional 401(k), Traditional IRA, 403(b), 457(b), SEP-IRA, SIMPLE IRA, and similar qualified pre-tax retirement accounts typically work. Roth IRAs don't work in a ROBS structure. Retirement balances at your current employer usually can't be used for ROBS until you separate. We can help you figure out what's available.

ROBS is most likely to be suitable for founders who have: (1) at least $50K in qualifying retirement funds; (2) an eligible business they will actively run as a bona fide W-2 employee of the new C-Corp; and (3) comfort operating a C-Corp.

ROBS is built for active operators and requires you to become a bona fide W-2 employee of the new C-Corp. It is not designed for passive ownership. Most founders treat the C-Corp as their primary job once the business is funded.

A 401(k) plan is only permitted to invest in employer stock that qualifies as "qualifying employer securities" under ERISA 407(d)(5). In practice, that means common or preferred stock of a C-Corp. LLC membership interests, S-Corp stock, and partnership units don't qualify.

The 401(k) plan trust owns the shares of C-Corp stock that it purchased using the rollover retirement funds. The founder and other investors may also separately own shares outside of the 401(k) plan trust.

Most Nexus 401(k) plans can go from intake to funded in 2 to 3 weeks. The key variable is often rollover speed: how quickly your existing custodian releases your retirement funds for transfer into the newly formed 401(k) plan.

The stock purchased by the 401(k) plan in a ROBS transaction is held by the plan, not by the founder personally, so it does not create a personal QSBS benefit. However, ROBS requires a C-Corp, which is the right entity structure for QSBS. If you or others personally acquire shares in the C-Corp outside the ROBS structure, those shares may qualify for QSBS treatment if the Section 1202 requirements are met.

Yes, ROBS can usually be combined with an SBA loan, investor capital, or other business financing. Founders often use ROBS funds as part of the equity injection for a larger transaction. The important point is that the financing needs to be structured carefully. The C-Corp should be the borrower, and any personal guarantees, collateral, or related-party terms need to be carefully assessed to avoid compliance issues. To learn more, read our article on prohibited transactions.

Nexus currently supports incorporation in Delaware and Nevada. Delaware is the most widely used choice for U.S. corporations and is especially familiar to investors, attorneys, lenders, and transaction counterparties. Nevada is also a strong option, particularly for founders who prefer its statutory approach to director and officer protection. You can learn more in our comparison article.

$5,000 one-time setup and $500 per quarter for ongoing administration. One plan, flat pricing. A breakdown of what's included can be found on the pricing page.

The setup fee covers the work needed to get from intake to a funded ROBS structure: C-Corp formation, C-Corp EIN filing, first-year registered agent, state filing and service fees, 401(k) plan and trust formation, 401(k) plan trust EIN filing, direct rollover coordination, coordination of the employer stock purchase by the 401(k) plan, and a first-year ERISA fidelity bond.

Nexus offers administrative, document, and coordination services related to ROBS structures and business formation. Legal, tax, and investment advice are not included. Before establishing or operating a ROBS 401(k) plan, you should consult with a qualified ERISA attorney, CPA, and any other advisors appropriate to your situation.

Nexus is our ROBS product. Standalone incorporation is not a core offering, but if you want to reach us about an incorporation-only engagement, email us.

Ongoing Nexus administration is $500 per quarter, flat. This covers the core annual compliance and administrative work associated with maintaining your 401(k) plan and corporate structure. Services outside the standard Nexus scope, such as tax preparation, bookkeeping, payroll, bank fees, or one-off legal/accounting projects, are not included.

Ongoing administration is the recurring administrative work associated with maintaining the ROBS structure after funding. It includes annual Form 5500 filing, required testing, ERISA bond renewal, cap table and valuation recordkeeping, registered-agent annual renewal, and filing service fees. Most of it runs in the background; Nexus surfaces what you need to sign, review, or confirm.

Employees who you determine to have met the 401(k) plan's eligibility criteria become plan participants and should be enrolled in the plan. The plan needs to offer them the same 401(k) investment options, features, and benefits that are available to you. Nexus performs the applicable nondiscrimination testing for all plan participants.

The 401(k) plan owns C-Corp stock, so when the business sells, the plan receives proceeds from its share of the sale. Those proceeds land back in the 401(k) plan. From there they can usually be rolled into an IRA or other qualified plan which preserves tax-deferred treatment. If the C-Corp meets QSBS requirements, some or all of the gain on the individually-owned shares may be excluded from federal taxes.

ROBS arrangements involve investment and compliance risk. Because retirement funds are invested into the business through the retirement plan, some or all of those funds could lose value if the business is unsuccessful. While ROBS provides a way to invest retirement assets into a business, it does not protect the business from failure.