ROBS vs Self-Directed IRA

19 snips

Sep 4, 2026

ROBS and Self-Directed IRAs offer different paths to using retirement funds for business ownership. This discussion explores buying a franchise, working in an IRA-owned business, prohibited transactions, Roth strategies, tax tradeoffs, compliance demands, and the ongoing costs of ROBS. It also covers Solo 401(k) loans and the famous Peter Thiel PayPal investment.

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INSIGHT

ROBS Lets Retirement Funds Buy Your Job

ROBS exists for people who want retirement funds to buy a business they will personally operate.
A standard 401(k) cannot directly buy a business that its owner runs because that creates a prohibited transaction.

INSIGHT

Why Franchise Buyers Use ROBS

ROBS is especially common for franchises and small-business acquisitions where the investor needs to work inside the company.
The structure permits a salary, but only while following extensive retirement-plan rules.

INSIGHT

The ROBS Structure Has Several Moving Parts

A ROBS requires a C corporation, a new 401(k), and a rollover before the plan purchases corporate shares.
The 401(k) owns the company, which then hires the investor to operate it.

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If you're ready to explore investing your retirement savings outside of traditional Wall Street investments, a Self-Directed IRA may be an option worth considering.

Ready to open a Self-Directed IRA? Book a call with my team at Directed IRA to get started and explore your options.

In this episode of the Directed IRA Podcast, Mat Sorensen and Mark J. Kohler break down the ROBS (Rollover as Business Startups) strategy and compare it to using a Self-Directed IRA to invest in a business. With so much misinformation circulating online and on social media, we’re separating the facts from the hype and explaining how these strategies actually work.

We discuss why ROBS can make sense for someone who wants to use their retirement funds to buy a business or franchise and work in that business, while also breaking down the complexity, tax implications, compliance requirements, and ongoing costs that come with the structure.

In This Episode, We Cover:

What is a ROBS? How the strategy allows retirement funds to invest in a business you intend to operate.
ROBS vs. Self-Directed IRA: The key differences and when each strategy may make sense.
The tax implications: Why the tax outcome of a traditional ROBS structure may not be as attractive as it sounds.
Roth strategies: How using Roth retirement funds can potentially change the tax equation.
Buying a business with an IRA: How a Self-Directed IRA can invest in a business without the account owner working in the business.
Prohibited transactions: Why working in a business owned by your IRA can create problems.
The complexity of ROBS: C corporations, 401(k) plans, reporting requirements, salaries, and ongoing maintenance.
Alternative ways to fund a business: Including the potential use of a Solo 401(k) loan.
Real-world examples: Including the story of how Peter Thiel used a Self-Directed Roth IRA to invest in PayPal.

For questions or to learn more about this episode's topic, book a call with an IRA specialist here: https://directedira.com/appointment/

Interested in learning more about alternative investments? Join us this year at the Alternative Asset Summit October 22 & 23, where you'll hear from industry experts and connect with like-minded investors exploring new ways to build wealth: https://altassetsummit.com/

Other:

Mat Sorensen: https://matsorensen.com

Mark J. Kohler: https://markjkohler.com/

KKOS Lawyers: https://kkoslawyers.com

Main Street Business https://mainstreetbusiness.com