Company Owners and Tracking Hours: the ROBS Plans

  • If you invested your own retirement monies into the Corporation, you must be considered a bona fide employee of the Corporation. 
  • Track the hours you work. That is how we establish you were/are a bona fide employee of the Corporation that sponsors the 401(k) Plan you are utilizing for your business financing strategy. 
    • Business owners should start tracking hours you work effective as of the date the Corporation was established (you are already working for the company at that point, spending a lot of time getting the business ready to go live). 
    • Our team must collect the hours you work at the end of each year as the DOL & IRS require us to report certain information about employees eligible to participate in the 401(k) Plan, including you. 
    • You don’t need to use a fancy time tracking system, use an excel spreadsheet and at a minimum, track your hours by week. 
  • This is an important requirement. In order to qualify to participate in a company retirement plan, roll retirement monies into that plan and invest those monies into your Corporation, you must be a bona fide employee of the company sponsoring the 401(k) Plan. Think about it this way, in order to participate in a 401(k) Plan, you must be an employee of the company sponsoring the 401(k) Plan (otherwise we could participate in any 401(k) Plan in the country, at our choosing).
Find out more about company owners and compensation: Company Owners and Compensation

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