Sioux Falls, SD – October 7, 2026 – Many first‑time founders in South Dakota lack the collateral or credit history that traditional lenders demand. IRA Financial, a provider of self‑directed retirement solutions, says a Rollover for Business Startups (ROBS) offers a debt‑free path to funding by allowing entrepreneurs to roll eligible 401(k) or IRA assets into their own company.
How a ROBS Works
The process begins with the founder forming a C‑corporation and adopting a new 401(k) plan. Eligible savings from a traditional IRA, SEP IRA, SIMPLE IRA, an existing 401(k) or a 457(b) plan are rolled directly into that plan – Roth IRAs are excluded. The plan then purchases newly issued stock in the corporation, providing cash that can be used for startup costs, payroll, inventory, equipment, real estate or franchise fees. Unlike a self‑directed IRA investment, the owner may work in the business and draw a salary.
Compliance Is Key
IRA Financial stresses that the ROBS structure rests on long‑standing exemptions in the Internal Revenue Code and ERISA. The IRS does not view ROBS arrangements as abusive tax avoidance, but it expects strict compliance. Each year the plan must file Form 5500, and the corporation’s stock must be valued annually. Failure to follow these steps can turn a legal funding strategy into a taxable distribution.
Cost Structure
IRA Financial charges a flat $3,500 to set up a ROBS and $1,200 per year for ongoing administration – no commissions and no fees tied to the amount rolled over. For investors who prefer to back another entrepreneur’s venture, a Self‑Directed IRA option is available for a flat $495 annual fee.
Real‑World Example
One client, Danny, used a Self‑Directed IRA to invest $5,500 in a startup, which later grew to a $13.5 million stake. A ROBS applies the same principle, but the account holder runs the business directly rather than acting as a passive investor.
Founder’s Advice
“The mistake I see most is founders treating a ROBS like a one‑time transaction,” said Adam Bergman, Esq., founder of IRA Financial. “The rollover is the easy part. The plan has to file every year, the stock has to be valued every year, and the 401(k) has to be open to your employees once you hire. Skip those steps and a perfectly legal funding strategy can turn into a taxable distribution.”
Local Impact
For Sioux Falls entrepreneurs seeking to keep their businesses rooted in the community, a ROBS can preserve family wealth while creating jobs and supporting local growth. The structure aligns with the values of personal responsibility and economic freedom that many South Dakota families cherish.
Learn More
Entrepreneurs interested in exploring a ROBS can visit irafinancial.com for detailed information and to schedule a consultation.
This press release is for informational purposes only and does not constitute tax, legal, or investment advice. Readers should consult a qualified professional before using retirement funds to start or buy a business.
Original reporting: KTBS 3 (Shreveport) — read the source article.
