Boy do I get a lot of blowback every time I share my findings about why the government has declared ROBS illegal!

Why is there not a specific government ruling on ROBS?

Great question!

It’s because once an issue has been ruled on, they don’t repeatedly consider it. “They” are the Department of Labor, and the first step of learning about Self-Directed IRA and 401(k) rules is finding out that “prohibited transactions” are an issue outside the jurisdiction of the IRS and in the hands of the Department of Labor (DOL).

When ROBS Was Ruled On

It was 2006. Debra Buchanan, the creator of the IRA LLC, asked the DOL a question about structuring an investment deal to avoid “prohibited transaction” status. (This was before she split with Guidant and became my legal counsel, but that’s another story.)

The DOL came back and said (paraphrased)

It doesn’t matter how you structure things or pursue exemptions. We’ve been clear throughout various rulings ["Advisory Opinions"] that a specific part of the law books [IRC 4975(c)(1)(D)] makes it prohibited for IRA or 401(k) funds to be used to benefit their account owner or family, unless it’s a taxable distribution.

That’s translated into humanspeak. You can see the actual ruling here. Untranslated legal language in it says:

…Department opinions interpreting [regulations] have made clear that a prohibited transaction occurs when a plan invests in a corporation as part of an arrangement or understanding under which it is expected that the corporation will engage in a transaction with a party in interest (or disqualified person).

The ROBS Coffin Is Sealed

This issue is so straightforward because DOL ruled on it as a bigger issue. DOL has received countless letters that ask “But what if I structure my Corporation this way or that way… do I then successfully evade the rules and regulations?”

And they always respond, “No. Using Self-Directed IRA or 401(k) funds to benefit the account owner or their family is always prohibited unless it’s through a taxable distribution.”

Tip: Don’t Piss Off The Government

I know that’s kind of common knowledge, but I wonder if you notice from the DOL language—”Department opinions interpreting [regulations] have made it clear”—that they are already (in 2006) annoyed at all the clever attempts at evading the rules and regulations.

Not a whole lot of wiggle room here. Zero, to be exact.

I know, I know… it’s bitter medicine. Especially if you dreamed up an awesome future all provided to you by ROBS.

But it’s quite easy to swallow if you get real and refocus your attention on legal strategies that actually work.

Why should you use my company to setup a Self-Directed IRA, IRA LLC, or Solo 401(k) instead of those others?

It’s quite simple really…

Those other companies all promote an illegal scheme called ROBS, and if you are a client of a company promoting an illegal scheme, you are a target for nasty IRS audits.

Best case audit scenario: After months or years of being audited, you are finally cleared. Your assets might be frozen during that time, and you may incur tens of thousands of dollars in attorney fees to defend yourself.

Worst case scenario: If you used the ROBS strategy yourself with, say a couple hundred thousand dollars, you could incur MILLIONS of dollars in taxes. Yep, you read that right. The tax penalties are severe.

What is ROBS?

ROBS is a fancy, semi-complex strategy involving a C-Corp, a 401(k), and you using your retirement funds to start, purchase or grow a business. I’m a huge fan of starting, buying, and growing businesses.

I think you should start or buy a business if you don’t already own one.

And I think you should be able to do whatever you like with all of your money.

Buuuuut… the government disagrees. The government says ROBS is illegal, and they aren’t yet going after ROBS promoters or ROBS users. Yet.

So basically, if you become a client of any of these other companies, you are associated with the promoters of an illegal scheme that the government will probably eventually pursue.

That kind of messes up the idea of gaining freedom, control, and independence, doesn’t it? I mean, I’m just guessing that your idea of freedom is NOT having your assets frozen by the IRS and being subjected to a multi-year, grueling audit.

The Nabers Group Difference

So, that’s pretty straightforward, isn’t it? We here at Nabers Group don’t take you to a magic fountain of youth, mystically multiply your investments by 10,000% per hour or anything like that. (That would be nice though, wouldn’t it?)

All we do is refrain from promoting flimsy “loophole theory” strategies that could get you in big trouble. As a Nabers Group client, one of the things you’ll enjoy is the peace of mind that comes with knowing you are safe. If you’re not a client yet, check us out by calling 877-903-2220.

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Odds and ends: Did you know that most Self-Directed IRA/401k investors FAIL? Learn how to steer clear of common, yet avoidable mistakes… and successfully preserve and grow your wealth.

When converting to a Self-Directed IRA/401k, the reason to avoid custodians is simple. Well, there are 4 reasons really.

UNNECESSARY DELAYS

With a custodian, you give custody of your retirement funds to yet another financial institution who acts as a middleman. This means when you request a transaction, you have to wait for them to process it.

LIMITED INVESTMENT OPTIONS

Because the ultimate “approval” of each requested transaction is up to the custodian, many of your 100% legal transactions get denied due to company policy or just due to the discretion of one of their employees. The whole point of self-directed investing is to reclaim control of your funds YOURSELF, isn’t it?

AUTOMATIC CONFISCATION

As the U.S. government continues to look for funding sources, several pieces of proposed legislation would “nationalize” your retirement accounts. Because a custodian is directly chartered and regulated by the government, your money would instantly disappear in the event of “nationalization.”

HIGHER COSTS

You’d think with confiscation vulnerability, limited investment options, and unnecessary delays… that custodians would be the cheapest solution, right? Well, they lure customers in with low setup fees (typically $50), and then on average their maintenance fees (automatically taken out of your retirement account) are usually thousands of dollars per year and TENS OF THOUSANDS of dollars per decade.

Avoiding custodians unlocks the pathway to REAL control of your investments. No delays, no investment limitations, no confiscation vulnerability, and extremely low costs. Speak with a representative now at 877-903-2220 or find out more here.

As you can see from the chart above, and as you may know from our free education posts, articles and videos… the Solo 401(k) can be structured to be much more powerful than any IRA.

These extra powers (self-trustee, participant loan, higher tax-deductible contributions, etc) are made possible by careful preparation of the plan documents.

Here’s how a Solo 401(k) is different:

• Requires document maintenance
• Doesn’t require custodian

401(k) document maintenance fees are much lower than IRA custodian fees, and to make the 401(k) even more of a no-brainer, it eliminates all unnecessary transactional paperwork and delays  ;-)