GLOSSARY

ROBS (401(k) rollover)

ROBS — Rollovers as Business Start-ups — is a structure that lets you fund a business with your retirement savings without an early-withdrawal penalty.

A ROBS arrangement rolls your 401(k)/IRA into a new retirement plan that buys stock in your new company, putting retirement money to work as business capital. It is legal, IRS-recognized, and heavily marketed to franchise buyers.

Understand what it really is: moving your least-risky asset into your most-risky one. If the franchise fails, the loss lands on your retirement, not just your business. It avoids loan payments, but unlike an SBA loan there is no lender underwriting the deal — nobody else has checked whether the numbers work. This is exactly the kind of decision to pressure-test with an advisor who isn't paid by the franchisor.