6 Best Rollover for Business Startups (ROBS) Providers for 2022
Tom has 15 years of experience helping small businesses evaluate financing and banking options. He shares this expertise in Fit Small Business’s financing and banking content.
This article is part of a larger series on Business Financing.
A rollover for business startups (ROBS) is a financing solution that helps start or purchase a business by using your retirement savings—without paying taxes or early withdrawal penalties. Due to IRS compliance requirements and the complexity involved in doing a ROBS, we recommend using one of these six experienced providers because of their expertise in helping set up and administer a ROBS 401(k). In a couple of recommendations, we have highlighted the provider’s strength with a specific additional product, service, or business segment.
- Guidant Financial: Best for businesses that want high-touch service, including free legal consultations
- Benetrends: Best ROBS provider for those who need an equipment leasing partner
- Pango Financial: Best option for those seeking a lending partner
- FranFund: Best option for franchises
- MySolo401k: Best option for affordability
- Business Funding Trust: Best for those seeking to be the only employee of their business
Guidant Financial: Best for High-touch Customer Service
Guidant Financial
What We Like
- Outstanding customer service
- Access to free legal counsel
- Access to other lending options
What's Missing
- Relatively high plan setup charge
Details
- Initial setup costs: $4,995
- Ongoing maintenance fees: $139 per month up to 10 participating employees—$3.33 per employee per month after that.
- Ongoing customer support: Audit support, plan eligibility tracking, IRS Form 5500 filing
- Additional financing offered: Small Business Administration (SBA) loans, secured and unsecured loans, equipment leasing
Why we like Guidant: Guidant ranks as our best overall ROBS plan provider because of its high-touch customer service, access to free outside legal counsel before you set up your ROBS, and its access to other lending options should you need them. Guidant Financial will also pay for your legal counsel should an audit occur. This is a very strong selling point, one that very few ROBS providers offer.
Guidant’s pricing is relatively high compared to its competitors. However, the customer service and access to legal counsel provide significant value that’s arguably worth the price.
Benetrends: Best for Businesses Also Seeking Equipment Leasing
Benetrends
What We Like
- High-quality customer service
- Extensive history and expertise in ROBS industry
- Access to other equipment leasing options
What's Missing
- Relatively high plan setup charge
- No guarantee of access to outside counsel written within the contract
Details
- Initial setup costs: $4,995
- Ongoing maintenance fees: $145 per month for first 25 employees, $20 per employee per month after that
- Ongoing customer support: Audit support, plan eligibility tracking, IRS Form 5500 filing
- Additional financing offered: SBA loans, securities-backed line of credit, equipment leasing
Why we like Benetrends: Benetrends has four decades of experience in business financing, working with thousands of startups in meeting financing objectives. Its expertise can connect a business owner with other financing options should they need it, including equipment leasing and lines of credit backed through securities. Like Guidant, Benetrends has a higher price point than many competitors, but its knowledge and experience are among the best in the ROBS industry.
Pango Financial: Best for Businesses Also Seeking Loans
Pango Financial
What We Like
- Affordable setup and monthly maintenance costs
- Discount for veterans and first responders
- Offer several lending and invoice factoring options
What's Missing
- Possible lack of robust support in case of an audit
Details
- Initial setup costs: $3,995 (20% discount for veterans & first responders)
- Ongoing maintenance fees: $110 per month
- Ongoing customer support: Audit support, plan eligibility tracking, IRS Form 5500 filing
- Additional financing offered: SBA and traditional loans, invoice factoring, lines of credit
Why we like Pango Financial: Pango Financial offers competitive set up and monthly maintenance fees, with the advantage of being one of the few ROBS providers to offer resources for invoice financing once your business is established. Pango Financial also partners with SBA and conventional lenders to help provide additional financing for businesses that need it. One disadvantage with Pango is a lack of legal counsel in case of audits.
FranFund: Best Option for Franchises
FranFund
What We Like
- Discount for veterans
- Expertise in franchise financing
- Strong customer service
What's Missing
- Nonrefundable loan application fee
- Relatively higher setup cost for nonveterans
Details
- Initial setup costs: $4,795 to $3,995 for veterans
- Ongoing maintenance fees: $130 per month up to 10 participating employees
- Ongoing customer support: Audit support, plan eligibility tracking, IRS Form 5500 filing
- Additional financing offered: SBA and traditional loans, leasing
Why we like FranFund: FranFund can perform ROBS transactions for any potential business owner; however, its specialty is franchises. Its setup price is slightly lower than Guidant and Benetrends and significantly lower for military veterans. One disadvantage to note is if you choose to pursue a loan in addition to a ROBS, FranFund’s application fee for the loan is nonrefundable. However, its expertise in understanding franchises makes them a great option for those looking to purchase a new or existing franchise business.
MySolo401k: Best for Affordability
MySolo401k
What We Like
- Affordable setup and monthly maintenance costs
- Expertise in 401(k) and ROBS programs
- Access to legal counsel in case of audit
What's Missing
- Limited support in other financing options
Details
- Initial setup costs: $3,000 (due to COVID-19)
- Ongoing maintenance fees: $899 annually for up to 10 participating employees; $75 for each employee after that
- Ongoing customer support: Audit support, plan eligibility tracking, IRS Form 5500 filing
- Additional financing offered: SBA loans through network partners
Why we like MySolo401k: MySolo401k is an affordable option for businesses with a limited number of employees and without the need for additional financing options. Unlike most ROBS providers, MySolo401k bills its administrative fees annually. At $899, MySolo401k has a lower average monthly price point than its other competitors. However, if you need other financing, MySolo401k only provides partnerships with other SBA lenders to assist you.
Business Funding Trust: Best Option for Sole-owner, Sole-employee Businesses
Business Funding Trust
What We Like
- No ongoing monthly fees
- Ideal for sole owner, sole employee businesses
- Tax credit available
What's Missing
- Limited support
- No other financing options for businesses
Details
- Initial setup costs: $4,950 due after setup
- Ongoing maintenance fees: $300 per IRS Form 5500 filing
- Ongoing customer support: IRS Form 5500 filing
- Additional financing offered: None
Why We Like Business Funding Trust: Business Funding Trust provides a simplified method to set up a ROBS. It’ll provide the filing of the IRS Form 5500 for a business but doesn’t offer support beyond the IRS filing, which means your business would need to manage the retirement plan for additional employees should there be any. Business Funding Trust is a great option for corporations that don’t plan to hire additional employees and only need the ROBS plan to get the business established. It’s worth noting that Business Funding Trust’s fees are paid after the ROBS is set up, which means that the business could claim a $1,500 tax credit over three years.
How We Determined the Best ROBS Providers
ROBS providers help you set up and manage all required reporting for a rollover for business startups, which can be confusing and lead to IRS audits if not done properly and on time. While all providers can guide you through the transaction, a good ROBS provider will have strong customer service and offer access to additional startup financing options should you need them.
Many ROBS providers have similar offerings. However, when using 401k business funding, customer service and support are critical for many busy business owners. The criteria we used to determine the best ROBS providers included:
- Setup fee: The initial cost of setting up a ROBS
- Ongoing maintenance fees: The monthly or annual costs for maintaining the ROBS in accordance with IRS and United States Department of Labor regulations
- Communication and customer service:
- Level of customer service business owners receive before, during, and after the ROBS is active (assisting business owners in filing required paperwork and plan maintenance)
- How effectively and conveniently ROBS providers can be reached with questions
- How other businesses view a particular provider
- Additional financing options: Beyond the ROBS plan itself, what other options are available for the business owner
Bottom Line
Any of the six ROBS plan providers that we have ranked will provide business owners with a quality level of service. Guidant ranks as the best option because of its high-touch customer service and its guarantee of free outside legal support should your ROBS plan be subject to an audit.
