Can ROBS buy commercial real estate?

A ROBS can fund a corporate real-estate purchase, but the standard transaction is not a retirement plan buying a building. The qualified plan receives a rollover, buys employer stock in the C corporation, and the C corporation receives cash. After that stock purchase, the corporation may use released corporate cash for a bona fide business purpose, including buying commercial real estate for the operating business. The plan generally owns employer stock, not the deed, lease, mortgage or building. ^[1][2][5]

The property still has to make business sense. A warehouse for inventory, a clinic building, a restaurant site or an office for employees is different from buying a rental property because the owner wants real estate exposure inside a retirement structure. The IRS materials focus on the ROBS sequence, valuation, business records and filing obligations; they do not approve a specific property, price, lender package, zoning result or tax treatment. ^{[1][2][12][13]}

This guide is not an appraisal, tax advice, legal opinion, tax deduction promise, lender approval, zoning or environmental conclusion. Its purpose is to help a prospective owner separate the actors, assets, documents and decisions before signing a purchase agreement or wiring funds.

Summary of the vocabulary

Read these definitions before the closing documents start moving. The terms separate the retirement plan, the stock issuer, the property owner, the closing records and the separate ERISA real-property concept.

The source account is a former plan or IRA that can make an eligible rollover distribution. The receiving qualified plan accepts only funds the administrator can reasonably verify. A direct rollover or trustee-to-trustee transfer is cleaner than a check paid to the individual because direct movement avoids the 60-day cash-in-hand problem and mandatory withholding that can apply to some distributions. ^[3][4]

After the rollover is accepted, the plan trust holds retirement-plan assets. The plan then buys employer stock issued by the C corporation. That stock is a plan asset. The corporation receives the stock proceeds in its corporate bank account. At that point, the corporation, not the individual owner and not the plan trust, should be the buyer or documented parent of the buyer in the real-estate file. ^[1][2][5]

Escrow should receive money from the correct source and release it under written settlement instructions. The deed, borrower, settlement statement, title insurance, lender instructions, board approvals, bank wires, property insurance and fixed-asset records should all tell the same story: corporate cash bought a corporate business asset.

Before the closing decision grid is useful, every role needs a complete paper trail. Use the grid to confirm that the plan, corporation, escrow file, lender file and tax records describe the same transaction before funds move.

ERISA also has a different lane for plan acquisition, sale or lease of qualifying employer real property. That term does not mean any building used by the company. Section 407 defines qualifying employer real property as parcels of employer real property when a substantial number of the parcels are dispersed geographically; each parcel and improvements are suitable, or adaptable without excessive cost, for more than one use; all parcels may be leased to one lessee; and acquisition and retention comply with the listed ERISA part 4 conditions and exceptions. ^[8]

Section 406 separately prohibits, unless an exemption applies, transactions such as sale, exchange or lease between a plan and a party in interest, lending between a plan and a party in interest, furnishing facilities, use of plan assets for a party in interest, and fiduciary self-dealing. Section 408 and 29 CFR 2550.408e provide conditions for certain qualifying-employer-security and qualifying-employer-real-property transactions, including adequate consideration, no commission, and applicable section 407(a) compliance. ^[7][9][10]

That separate lane is not transaction approval and does not turn a single corporate building acquisition into standard ROBS. If the plan trust would take title, lease property to the company, buy from or lease to a related party, assume debt, or hold real estate instead of employer stock, the file needs ERISA counsel before anyone treats it as permissible.

The closing package should show the same buyer, borrower, payer and asset treatment across corporate, plan, lender and tax records. Keep these records together because each one answers a different question:

• Plan document and trust agreement
• Rollover acceptance and verification
• Employer-stock subscription and valuation support
• Corporate resolutions authorizing the purchase
• Purchase agreement and amendments
• Escrow instructions and bank wire records
• Settlement statement and title policy
• Deed, survey, lien and insurance records
• Loan agreement, guaranty and reserve requirements
• Appraisal, environmental and zoning records
• Lease, occupancy and tenant-deposit records
• Basis allocation and fixed-asset register
• Placed-in-service support and improvement records
• Failed-close refund, forfeiture or dispute records

Basis starts with cost, which generally includes cash, debt obligations and certain capitalized acquisition costs. Land and building basis should be separated because land is not depreciable. Depreciation generally starts only when depreciable property is placed in service for its assigned business use. ^[12][13]

These examples are neutral bookkeeping checks, not property recommendations. They preserve the distinction between accepted rollover funds, released corporate stock proceeds, lender money, escrow restrictions, refunded cash and unresolved variances.

A clean ROBS setup does not make the property good, affordable or administratively simple. The business owner should pause for written professional review if the file includes founder or family personal use, a related-party seller or landlord, affiliate tenants, a leaseback, pre-ROBS earnest-money reimbursement, mixed business and personal use, environmental uncertainty, unsettled zoning, a disputed refund, or a lender condition that changes the source of funds.

If the close fails, preserve the audit trail. Earnest money should not be counted as both escrowed and available. Refunded cash becomes available only after clearance. A retained deposit, legal dispute or unexplained shortfall should remain quarantined until counsel and accounting records decide whether it is forfeited, refunded, expensed or still disputed.

Compare alternatives before the building absorbs retirement-funded corporate cash. ROBS may be worth evaluating when eligible retirement assets are available, the property is central to the operating business, avoiding debt service materially improves survival odds, and enough retirement diversification remains outside the company. It is less compelling when the building absorbs the cash needed for payroll, inventory, buildout, employee plan administration or a realistic failure reserve.

The cards below frame the main substitutes and tradeoffs to review before committing one property-dependent company to the ROBS path.

Turn the answer into a written closing checklist before any purchase agreement, wire or escrow instruction becomes irreversible. These next steps summarize who should confirm each part of the file.

1. Ask the ROBS administrator to confirm the rollover, plan, trust, stock-purchase and valuation documents needed before corporate cash is released.
2. Ask the real-estate attorney and title company to identify the exact buyer, borrower, insured party, escrow instructions and settlement statement line items.
3. Ask the CPA to prepare the basis allocation, land/building split, improvement treatment and placed-in-service support.
4. Ask ERISA counsel to review any plan-direct title, related-party, leaseback, personal-use, affiliate-tenant or qualifying-employer-real-property question before signing.
5. Compare an operating lease, SBA 504 or conventional real-estate loan, smaller site, delayed purchase and non-retirement funding before committing retirement assets to one property-dependent company.

These frequently asked questions restate the boundaries that matter most: standard corporate purchase, plan-direct real estate, passive rental use, personal use, tax records and failed closings.

1. 1. IRS ROBS Compliance Project

   Re-opened July 31, 2026. Defines ROBS as rollover assets used by a plan to buy new C corporation stock and lists IRS focus areas: rollover records, participant data, stock valuation, stock purchase records, business records, Form 5500 and corporate filings.

2. 2. IRS ROBS examination guidelines

   Re-opened July 31, 2026. Describes the typical sequence: C corporation, qualified plan, rollover or trustee transfer, plan purchase of employer stock, corporate proceeds used for a business or franchise, and case-by-case concerns.

3. 3. IRS rollover rules

   Re-opened July 31, 2026. Used for direct rollover, trustee-to-trustee transfer, 60-day rollover, withholding, eligible rollover distribution and excluded distribution boundaries.

4. 4. IRS rollover verification

   Re-opened July 31, 2026. Used for administrator verification of rollover source, payment source, permissible funds, timing and correction of invalid rollover contributions.

5. 5. DOL fiduciary responsibilities

   Re-opened July 31, 2026. Used for written plan, trust fund, recordkeeping, prudence, exclusive purpose, service-provider monitoring, prohibited transactions and employer-stock monitoring.

6. 6. ERISA section 404

   Re-opened July 31, 2026. Used for exclusive purpose, prudence, plan-document compliance and diversification rules, including the employer-stock and employer-real-property exception for eligible individual account plans.

7. 7. ERISA section 406

   Re-opened July 31, 2026. Used for sale, exchange, lease, lending, facilities, plan-asset use, employer-real-property violations and fiduciary self-dealing boundaries.

8. 8. ERISA section 407

   Re-opened July 31, 2026. Used to distinguish qualifying employer securities from qualifying employer real property and to quote the employer-real-property definition.

9. 9. ERISA section 408

   Re-opened July 31, 2026. Used for statutory exemptions, adequate consideration, reasonable service arrangements, employer securities and employer real property.

10. 10. 29 CFR 2550.408e

    Re-opened July 31, 2026. Used for conditions on plan acquisition, sale or lease of qualifying employer real property: adequate consideration, no commission and section 407(a) compliance where applicable.

11. 11. SBA 504 loans

    Re-opened July 31, 2026. Used only to bound public commercial-real-estate financing claims: 504 loans may finance major fixed assets including buildings and land, but not working capital, inventory, speculation or rental investment.

12. 12. IRS Publication 551

    Re-opened July 31, 2026. Used for basis, cost, settlement costs, real property, land/building allocation, improvements and basis records.

13. 13. IRS Publication 946

    Re-opened July 31, 2026. Used for depreciation boundaries: property ownership, business use, land, placed in service, repairs, improvements and recovery classes.