C-Corporation Status for the ROBS Plans - Do Not Change the Type of Entity

  • Your Corporation must retain its C-Corp status as long as your retirement (401k) monies are invested in the Corporation. 
  • If a CPA recommends that you convert your C-Corp to S-Corp, an LLC or any other entity type, do not agree to do so without talking with us first. If 401k monies are invested in your Corporation, conversion to S-Corp status will result in a prohibited transaction, taxes and penalties.  
  • The reason a "C" corporation must be used, as opposed to an "S" corporation or LLC, is that the regulations that apply to this strategy (the strategy of investing retirement monies into a Corporation) require stock (not membership or other interest) ownership by the Qualified Retirement Plan (401k, etc.). 
  • Even though Limited Liability Companies (LLC) can select to be taxed as a “C” corporation, “S” corporation, partnership, disregarded entity, they do not qualify because the entity structure only allows membership interest and no stock ownership.

Leading Retirement Solutions

(206) 430-5084 phone
  (800) 974-2814 (toll free)



Our mission: to proactively support organizations and lead them toward a secure future.