A proven structure, handled end to end
ROBS -- Rollover as Business Startup -- is an IRS-recognized way to use retirement savings to fund a business. The rules are established. What Nova does is handle the setup and keep it compliant year after year.
What ROBS is, in plain language
A ROBS structure lets a 401(k) plan invest in the stock of the company that sponsors it. If the plan happens to sponsor your own C-Corporation, the plan can buy your C-Corp's stock -- and the capital moves from the plan into the business.
The mechanics rely on provisions in ERISA and the Internal Revenue Code that have been in place since the 1970s. Because a rollover from one qualified retirement account into another is not a distribution, no income tax is owed and no early-withdrawal penalty applies. The retirement money never touches your personal account.
What it is not: ROBS is not a loan, a distribution, or a tax loophole. It is a qualified retirement plan that happens to invest in a single employer's stock -- which ERISA explicitly permits.
Who qualifies for Nova
Three requirements. If you meet all three, a ROBS structure is available to you.
Qualifying retirement funds
A 401(k), IRA, 403(b), 457(b), SEP-IRA, SIMPLE IRA, or similar qualified account. Roth dollars and current-employer 401(k) balances you can't roll out are generally not usable.
Most founders need at least $50,000 in qualifying funds for the numbers to work. Below that, setup and annual administration consume too much of the capital you would deploy.
A business you will actively run
You must become a bona fide W-2 employee of the new C-Corporation. That means actively working in the business, not passively holding stock. The IRS cares about substance: you are running a company, not using a retirement plan as a side investment vehicle.
Willingness to operate as a C-Corp
The structure requires a C-Corporation. LLCs, S-Corps, and partnerships cannot issue the kind of stock that a 401(k) plan is allowed to hold. This is the most common surprise for founders who expected to operate as an LLC.
Why it has to be a C-Corporation
A 401(k) plan is only permitted to invest in a specific kind of employer stock: "qualifying employer securities" under ERISA section 407(d)(5). In practice, that means common or preferred stock of a C-Corporation. LLC membership interests, S-Corp stock, and partnership units don't qualify.
The C-Corp requirement cuts both ways. On one hand, it rules out the simplest pass-through structures. On the other, it opens up benefits that only C-Corporations get -- including Qualified Small Business Stock (QSBS) treatment, which can exclude up to $10M of gain from federal taxes if the business is eventually sold after the 5-year holding period.
How Nova sets it up
The full setup takes roughly 3 to 6 weeks, depending on your state's filing speed and how fast your current custodian processes the rollover.
Eligibility check and intake
You confirm qualifying retirement funds and W-2 intent. Nova confirms the structure fits your situation before any filings happen.
C-Corp formation
Nova files articles of incorporation, drafts governance documents, appoints officers, and obtains your EIN. You pick the jurisdiction; we handle the filings.
401(k) plan and trust
A new qualified 401(k) plan is established, sponsored by your C-Corp. The plan has its own trust, its own EIN, and its own custodian account (typically at Fidelity).
Rollover and stock issuance
Your existing retirement funds roll from their current custodian into the new plan. The plan then purchases C-Corp stock. Capital moves from the plan into the C-Corp's operating account.
You're funded
The business has capital. You become a W-2 employee. You start operating. No taxes, no penalties, no debt, no outside equity.
What Nova handles and what you do
- C-Corp formation and state filings
- EIN for the C-Corp and for the plan trust
- 401(k) plan document, trust agreement, and adoption agreement
- Custodian account setup and rollover coordination
- Stock issuance to the plan and cap table maintenance
- Annual Form 5500 filings
- Required nondiscrimination testing
- Ongoing compliance monitoring and plan amendments
- Decide what business to start or buy
- Sign the plan documents and rollover paperwork
- Open the business bank account
- Pay yourself a reasonable W-2 salary as you operate
- Keep books clean enough for annual filings
- Tell us about major corporate events (funding rounds, acquisitions, sale)
What ongoing administration looks like
ROBS is not a one-time transaction. Because the structure involves a qualified retirement plan, it has annual obligations. Keeping those obligations current is the biggest reason Nova exists.
Annual Form 5500
Every 401(k) plan files a Form 5500 with the Department of Labor each year. Nova prepares and files it on your behalf. The form documents plan assets, participants, and transactions.
Nondiscrimination testing
If you add employees to the business, federal law requires testing to confirm the plan doesn't disproportionately favor highly compensated employees. Nova runs the tests and advises on any adjustments.
Plan amendments and IRS updates
The IRS periodically revises plan requirements. Nova tracks the changes, amends your plan document when needed, and keeps the structure in good standing.
Corporate events
Raising outside capital, bringing in partners, selling the business, or winding down all have implications for the plan. Nova handles the required filings and stock transactions so the plan stays compliant through the event.
What it costs
One-time setup of $5,000 covers formation, plan setup, rollover coordination, and stock issuance. Ongoing administration is $500 per quarter and covers everything described above -- Form 5500, testing, amendments, and corporate events handling.
There are no tiered plans. There are no per-event add-ons for standard ROBS administration. See full pricing and comparison against other providers.
Ready to see if you qualify?
The eligibility check takes a few minutes and tells you whether ROBS fits your situation before you commit to anything.