[1] ROBS plans, while not considered an abusive tax avoidance transaction, are, according to the IRS, "questionable"[2] because they may solely benefit one individual – the individual who rolls over his or her existing retirement 401k withdrawal funds to the ROBS plan in a tax-free transaction.
There remains a substantial question whether such referral fees are illegal under ERISA and the U.S. Criminal Code: Offer, Acceptance, or Solicitation to Influence Operations of Employee Benefit Plan (18 U.S.C.
The IRS issues a favorable DL if a plan's terms meet Internal Revenue Code requirements.
[1] ROBS plans are an alternative for start up franchises or businesses to receiving an SBA loan or conventional bank financing.
Some individuals who started ROBS plans lost not only their retirement assets, accumulated over many years, but also their dream of owning a business.