Rollovers as Business Start Ups (ROBs) Compliance: the IRS View

Rollovers as Business Start Ups (ROBs) Compliance:  the IRS View

Have you ever wondered what the IRS is thinking about Rollovers as Business Start Ups?  Wonder no more – they have a website page dedicated to this particular structure. The website page appears to be updated fairly regularly, and as of this blog date, the most recent update was October of 2016.

The IRS first started investigating these structures in 2008 with the publication or release of an IRS memorandum.  Subsequently, the IRS launched and completed a compliance project that was substantively concluded in 2010.  Both the initial memorandum and the “compliance project” that followed, are available for public perusal in the link provided below.

The ROBs acronym (Rollovers as Business Start Ups) was coined by the IRS and obviously has a negative connotation.  The technical transaction is a what is referred to as a Qualified Employer Security transaction.

If one reviews the IRS information and published memorandums and other information, the information is not anything that seasoned practitioners were not already aware of.  Despite numerous companies that offer assistance in establishing these structures, this is a complex area of law with numerous issues the span across the Internal Revenue Code, ERISA provisions, Department of Labor, as well as a developing area of case law in U.S. Tax Court and other federal courts.  Thus, it is imperative that taxpayers seek and retain competent counsel to help them navigate this structure.  Failure to do so may result in significant, unwanted tax ramifications that can be costly to the taxpayer, and expensive to correct if a mistake occurs.

We’ve posted a link to the current page that addresses ROBs as of the date of this post.

If the above link does not work, navigate to and search for “robs compliance” in th search field.