Q1: How complicated is it for the ROBS 401k funded company to buy back the shares? Can it do in blocks or does it need to be all at once?
Q2: On the 401k business financing exit strategy would there be any tax liabilities if done at fair market value?
ANSWER 1): As far as the company stock buyback, it is typically a straightforward process in our experience as the company merely transfers funds back to the 401k in order to buy stock back from the 401k at the then fair market value. If the stock buyback is done on or around the end of the year, you could use the annual valuation that you will need for annual reporting purposes to support the price at which the stock was bought back.
ANSWER 2): The stock buyback can be done in one transaction or a series of transactions.
ANSWER 3): There is no tax liability to the 401k as you are merely selling stock in your 401k for cash and any gains will remain in the 401k on a tax-deferred basis.
401k Business Funding FAQS
Mark Nolan has been active in the 401k and IRA industry for over 18 years. Working as a 401k administrator at Nationwide Insurance Company; then working as a Compliance Officer and Manager at self-directed IRA/401k custodian companies such as Trust Administration Services Corporation (now owned by Equity Trust Company), to IRA Services Trust company. Mark is currently the Compliance Manager at MySolo401k.Net.