Certified in Equipment, Machinery, Business Appraisal
Call Us: 919-424-6300

How A Buyer’s Agent Can Help You Buy or Invest in a Small Raleigh, NC Business, Using ERISA.


ROBS is not ‘Rob’, as in “I was robbed”. The Capital ‘R’ stands for Rollover.  I am talking about Rolling Over Retirement Savings.  In this case Business Start Ups. That is IRS speak for diversifying ‘some’ (NOT all!) of that stock or CD money in your 401-k or IRA into a small business venture.   

                   WHAT IS ERISA?

This goes back to the last days of Richard Nixon as President, his resigning and Gerald Ford taking over. The year was 1974 and this Business Consultant was just beginning his practice of helping people become self-employed.

President Ford, nee Congressman Ford, was well thought of in Congress and a disgraced Nixon was allowed to nominate Ford as a replacement Vice President and to then succeed him upon resignation, as President of the United States. That year, 1974, the United States Congress passed sweeping tax legislation.  It became known as The Employee Retirement Income Security Act. Aka ERISA. 

Among many other things, and as far ago as the mid 1970’s, this ERISA law allowed and encouraged regular folks with built-up retirement funds to diversify into a new category of now IRS approved investments – Small Business ownership!   Basically, it provided an exemption to allow “Rollovers for business start-ups”. ROBS is one of the strategies made possible through that legislation.

Most people are not aware of this option.  It is a way to fund, to finance the business acquisition. The business acquisition can be an existing, operating business, meaning cash flow on day one.  This is the most common application of this resource. But even a so called start-up.is fair game. 

                    AFTER ALL, IT’S YOUR MONEY!

Think about it.  The money in your retirement account is your money.  It’s not the government’s money.

They might want to think so, because it was tax free.  Meaning, you did not pay income tax on the funds.  You got a tax deduction, in the case of an IRA. But it was still your money from your exchange of your time and sweat for the money that you earned. What could be better than taking some of it to pursue your dream of self-employment?  Or Investment Ownership? 


The devil is in the details.  And if you don’t do this exactly right, we go back to the government position that its theirs, not yours. So, how do you avoid this Red Flag?  The answer is, engage a knowledgeable Business Consultant.  As a Buyer’s Rep or Buyer’s Agent, I would put you in touch with the right organization, including one that since 2003 has helped thousands of people across the country move money from retirement accounts to successful small business ownership. Perhaps you have found a business to acquire and you are looking at the SBA for a small business loan. Or you have a start-up in your garage like Bill Gates and you need seed money? You may have all you need already!  Let Pro Biz and me, Lou Sauer, be your dedicated contact.  I’m here to answer any questions you have.

It goes without saying, spending (reallocating) some of your retirement money is a serious decision. There are lots of ways to lose your money! If you own stocks and bonds in your 401-k, they can drop like a rock in a financial crisis.  This applies equally to using the funds for a start-up or small business acquisition. 


The gigantic big plus is that you avoid the tax penalty, if done right.  The tax-free money says tax free!  Normally, you pay current taxes and penalties if you withdraw funds from retirement accounts.  Ouch! But under ROBS, you avoid this.  It is an Investment you placed your funds into, going from one category, say selling your 50 of your 100 shares of Tesla stock, to buy, say, a ¼ in a successful Bakery/Coffee Shop.  

 Let me know if I can assist you in learning about ROBS.  And doing it safely.

Comments are closed.