Can Roth IRA or Roth 401(k) Funds Be Used in a ROBS Structure?

April 03, 2025
by a searcher from Northwestern University - Kellogg School of Management in Chicago, IL, USA
I’m currently evaluating how to fund the equity portion of an SBA deal and had been planning to utilize a ROBS (Rollover as Business Startup) structure. However, I recently heard that ROBS can only be done with pre-tax funds, and not with money in a self-directed Roth IRA or Roth 401(k).
Before I rule it out, I want to validate whether that's actually true — and if so, whether any options exist to tap Roth funds (either IRA or 401(k)) for an equity injection, whether in an SBA deal or a larger independent sponsor structure.
Would love to hear from anyone who has:
Explored or used Roth IRA/401(k) funds in a business acquisition
Considered ROBS and hit this same Roth limitation
Found any creative or compliant workarounds
Worked with a provider who knows the nuances here
Appreciate any insights or resources — feel free to DM me if you prefer!
from Babson College in Clinton, CT, USA
from The University of Chicago in Chicago, IL, USA