I’m interested in doing a business financing 401k ROBS transaction – as a business owner. I have a question in regards to how capital gains will be treated.
As part of my business, I buy businesses – and then sell them later.
When I sell a business (that’s owned within my business) – how are capital gains treated in a ROBS ownership situation? Will the gains be protected at the time of sale?
And to confirm - the income I receive during the ownership period would be protected with a ROBS transaction – correct?
When the C-corporation that is funded with your retirement sells its assets, goodwill, etc., the C-corporation will be responsible for any gains realized and then the C-corporation will typically be shut down including paying back any creditors and then returning the remaining proceeds to the shareholders including the 401k for your benefit and you personally in accordance with the ownership percentages (e.g. if 90% of the initial funds invested are proceeds of the 401k rollover then 90% of the stock will be held in the 401k for your benefit). Any gains that flow to the 401k will accrue on a tax-deferred basis while you will have to pay capital gains tax on any gains that are attributable to the stock that you own personally.