ROBS Glossary: search the terms before you act on the structure.

A

Plain meaning

For an asset with no generally recognized market, ERISA uses adequate consideration to mean fair market value as determined in good faith by the trustee or named fiduciary under plan terms and regulations.

ROBS context

In a ROBS, this is the fiduciary valuation boundary for plan purchases or later disposition of private C corporation employer stock; it is not a provider approval stamp.

Boundary

Not the same as cost, book value, seller asking price, or a guarantee that the transaction is prudent.

Source basis

ERISA section 3(18)DOL Fiduciary Responsibilities

Plain meaning

An adoption agreement is the elections document used with a pre-approved retirement plan to select plan provisions such as eligibility, contributions, and administrative choices.

ROBS context

ROBS owners should know which elected provisions govern employee eligibility, employer stock rights, loans, distributions, and plan termination.

Boundary

Not the same as the SPD, corporate bylaws, or a custom legal opinion.

Source basis

IRS Preapproved Retirement PlansIRS ROBS Compliance Project

Plain meaning

An affiliated service group is an aggregation rule that can require related service organizations to be treated together for qualified-plan requirements.

ROBS context

A ROBS company with related businesses or management/service relationships may need professional testing before assuming only one payroll is relevant.

Boundary

Not the same as common ownership alone; the rule is technical and fact-specific.

Source basis

26 U.S.C. 414IRS Common Qualified Plan Requirements

Plain meaning

Allocation is the plan-rule process for assigning employer contributions, forfeitures, or other plan amounts among participant accounts.

ROBS context

In a ROBS plan, allocations for eligible employees must follow plan terms rather than founder-only expectations.

Boundary

Not the same as elective deferral payroll withholding or corporate profit distribution.

Source basis

IRS 401(k) Plan Fix-It GuideIRS ROBS Compliance Project

Plain meaning

Annual valuation is the recurring process of assigning fair market value to plan assets for reporting and participant-account purposes.

ROBS context

ROBS plans holding private employer stock need support for the value reported on participant records and Form 5500-series filings.

Boundary

Not the same as a transaction-level fairness opinion, purchase price, or audit clearance.

Source basis

IRS Retirement Topics - Plan AssetsIRS Form 5500 Corner

B

Plain meaning

A beneficiary is a person or entity designated to receive plan benefits after a participant death, subject to plan and legal rules.

ROBS context

ROBS death or succession scenarios can require beneficiary, distribution, valuation, and corporate coordination.

Boundary

Not the same as a shareholder, employee, or plan fiduciary merely because the same person may have multiple roles.

Source basis

DOL Reporting and Disclosure GuideIRS 401(k) Plan Fix-It Guide

Plain meaning

A business asset sale transfers selected business assets and liabilities rather than the corporation stock itself.

ROBS context

For a ROBS C corporation, sale proceeds generally belong first to the corporation; separate steps may be needed for plan-owned employer stock, distributions, or termination.

Boundary

Not the same as the plan selling its shares or the owner personally receiving sale proceeds.

Source basis

IRS ROBS Compliance ProjectIRS Retirement Topics - Plan Assets

C

Plain meaning

A C corporation is a taxable corporation treated separately from its owners for federal income tax purposes unless another valid tax status applies.

ROBS context

The conventional ROBS structure uses a C corporation because a qualified plan can buy employer securities of the sponsoring corporation; S corporation and LLC structures do not perform the same employer-stock function.

Boundary

Not the same as an LLC, S corporation, sole proprietorship, or proof the stock qualifies for every plan transaction.

Source basis

IRS Business StructuresIRS ROBS Compliance Project

Plain meaning

Common control rules can aggregate trades or businesses under related ownership for retirement-plan testing and qualification requirements.

ROBS context

ROBS owners with multiple companies, family ownership, or management entities should not assume the new C corporation is tested in isolation.

Boundary

Not the same as informal influence or brand affiliation; ownership and service facts matter.

Source basis

26 U.S.C. 414IRS Common Qualified Plan Requirements

Plain meaning

A contribution is money or property added to a retirement plan under plan terms and tax rules.

ROBS context

After setup, a ROBS plan may have elective deferrals, employer contributions, rollovers, and allocations that must be tracked separately.

Boundary

Not the same as the initial stock-purchase proceeds received by the corporation.

Source basis

IRS 401(k) Plan Fix-It GuideIRS ROBS Compliance Project

Plain meaning

A controlled group is a set of related corporations or businesses treated as one employer for certain qualified-plan rules.

ROBS context

A ROBS company connected to other businesses may need controlled-group review for eligibility, coverage, nondiscrimination, and top-heavy rules.

Boundary

Not the same as a franchise system or vendor relationship by itself.

Source basis

26 U.S.C. 414IRS Common Qualified Plan Requirements

Plain meaning

A corporate redemption is a corporation buying back its own stock from a shareholder.

ROBS context

If the ROBS plan holds employer stock, a redemption can be one way to move value from corporation to plan, but price, authority, solvency, fiduciary, and prohibited-transaction issues require professional review.

Boundary

Not the same as a participant distribution or automatic plan termination.

Source basis

IRS Retirement Topics - Plan AssetsERISA section 406

Plain meaning

Coverage testing measures whether a qualified plan benefits a sufficient group of non-highly compensated employees compared with highly compensated employees.

ROBS context

A ROBS plan that initially covered only the founder can develop testing issues as employees become eligible.

Boundary

Not the same as health insurance coverage or a provider saying employees are not yet enrolled.

Source basis

IRS Common Qualified Plan RequirementsIRS ROBS Compliance Project

Plain meaning

A custodian holds plan or account assets under an arrangement but does not automatically decide every legal, tax, fiduciary, or valuation question.

ROBS context

ROBS files should separate custodian statements from corporate bank records and plan fiduciary approvals.

Boundary

Not the same as the trustee, TPA, recordkeeper, or ERISA counsel unless documents assign those roles.

Source basis

IRS Retirement Topics - Plan AssetsDOL Fiduciary Responsibilities

D

Plain meaning

An IRS determination letter is a written IRS statement on a retirement plan document’s qualified status based on submitted facts.

ROBS context

ROBS providers may use pre-approved plan documents or seek specific letters in limited contexts; a letter is not an approval of every operation or stock transaction.

Boundary

Not the same as IRS approval of a ROBS, provider endorsement, or audit immunity.

Source basis

IRS Determination, Opinion, and Advisory LettersIRS Preapproved Retirement Plans

Plain meaning

A direct rollover moves an eligible rollover distribution directly from one eligible retirement plan or IRA to another eligible retirement plan or IRA.

ROBS context

ROBS implementation typically tries to avoid the cash passing through the individual because withholding and timing rules can create tax problems.

Boundary

Not the same as a participant loan, taxable withdrawal, or proof the receiving plan is properly operated.

Source basis

IRS Rollover ChartIRS ROBS Compliance Project

Plain meaning

A disqualified person is an Internal Revenue Code term for persons and entities closely connected to a plan, including fiduciaries, employers, certain owners, family members, and related entities.

ROBS context

ROBS related-party reviews often compare IRC disqualified-person rules with ERISA party-in-interest rules before transactions with the company, owner, family, lenders, or affiliates.

Boundary

Not the same as ERISA party in interest, though the categories overlap.

Source basis

26 U.S.C. 4975ERISA section 406

Plain meaning

A distributable event is a plan-permitted event that allows money to be distributed, such as separation from service, plan termination, disability, death, or another event allowed by law and plan terms.

ROBS context

A business sale, provider change, or owner preference does not by itself establish that plan-held ROBS assets can be distributed.

Boundary

Not the same as a rollover request or liquidity need.

Source basis

IRS 401(k) Plan Fix-It GuideIRS Rollover Chart

Plain meaning

Diversification is spreading plan investments to reduce the risk of large losses, subject to ERISA duties and statutory exceptions.

ROBS context

ROBS intentionally concentrates plan assets in employer stock, so the fiduciary must understand the employer-securities framework and the participant’s retirement concentration risk.

Boundary

Not the same as saying every employer-stock investment is imprudent or automatically exempt from review.

Source basis

ERISA section 404DOL Fiduciary Responsibilities

Plain meaning

The Department of Labor, mainly through EBSA, administers and enforces ERISA fiduciary, reporting, disclosure, and prohibited-transaction rules for private employee benefit plans.

ROBS context

ROBS plans may involve DOL issues when fiduciary duties, plan assets, Form 5500 reporting, service-provider oversight, missing participants, or prohibited transactions are in scope.

Boundary

Not the same as the IRS, PBGC, a provider, or a determination that a ROBS transaction is acceptable.

Source basis

DOL Fiduciary ResponsibilitiesDOL Form 5500 Series

Plain meaning

The DOL Voluntary Fiduciary Correction Program is a program for correcting specified ERISA fiduciary breaches and receiving no-action relief when program conditions are met.

ROBS context

Some ROBS problems may be plan-operation or fiduciary issues rather than IRS qualification issues, so DOL correction lanes may need separate review.

Boundary

Not the same as IRS EPCRS, automatic forgiveness, or a private settlement.

Source basis

DOL Voluntary Fiduciary Correction ProgramDOL Fiduciary Responsibilities

E

Plain meaning

An elective deferral is a participant’s salary-reduction contribution to a 401(k) plan.

ROBS context

ROBS owners and eligible employees may have deferral rights under the plan after the initial rollover and stock purchase.

Boundary

Not the same as a rollover, employer contribution, or stock purchase.

Source basis

IRS 401(k) Plan Fix-It GuideIRS Retirement Plan Contribution Limits

Plain meaning

Eligibility is the set of plan rules determining when employees may enter the plan based on age, service, entry dates, and exclusions allowed by law and plan terms.

ROBS context

Employee eligibility is central because a ROBS plan is an actual qualified plan, not a founder-only funding shell once employees meet the terms.

Boundary

Not the same as business eligibility for a loan, franchise approval, or provider onboarding.

Source basis

IRS 401(k) Plan Fix-It GuideIRS ROBS Compliance Project

Plain meaning

An eligible rollover distribution is a distribution from a qualified plan or certain other retirement arrangements that can be rolled over, excluding categories such as required minimum distributions and some periodic payments.

ROBS context

ROBS funding depends on assets being eligible and available for rollover under the source arrangement and receiving plan.

Boundary

Not the same as the whole account balance or a provider minimum funding amount.

Source basis

IRS Rollover ChartIRS 401(k) Plan Fix-It Guide

Plain meaning

An employer contribution is a contribution made by the employer to the plan under the plan’s formula and limits.

ROBS context

A ROBS C corporation that adopts matching or profit-sharing contributions must administer those contributions for eligible participants under plan terms.

Boundary

Not the same as corporate capitalization from the plan’s stock purchase.

Source basis

IRS 401(k) Plan Fix-It GuideIRS Retirement Plan Contribution Limits

Plain meaning

Employer securities are stock or other qualifying securities issued by the employer; special retirement-plan rules apply to qualifying employer securities.

ROBS context

A ROBS generally involves the qualified plan buying C corporation employer stock, but not every share, entity, price, or transaction automatically satisfies the conditions.

Boundary

Not the same as every C corporation stock issuance, LLC membership interests, S corporation shares, or publicly traded diversification.

Source basis

ERISA section 407IRS ROBS Compliance Project

Plain meaning

EPCRS is the IRS system for correcting certain retirement-plan qualification failures through self-correction, voluntary correction, or audit-related correction programs.

ROBS context

ROBS errors involving plan terms or operations may need EPCRS analysis, but correction availability depends on facts and current IRS procedure.

Boundary

Not the same as DOL VFCP or guaranteed tax relief for prohibited transactions.

Source basis

IRS EPCRS OverviewIRS ROBS Compliance Project

Plain meaning

ERISA is the federal law governing many private-sector employee benefit plans, including fiduciary duties, reporting, disclosure, and prohibited-transaction rules.

ROBS context

ROBS plans are usually discussed under both tax-qualification rules and ERISA obligations when the plan covers employees.

Boundary

Not the same as the Internal Revenue Code, though the two overlap.

Source basis

ERISA section 404DOL Fiduciary Responsibilities

Plain meaning

The exclusive-benefit rule requires plan assets to be used for the exclusive purpose of providing benefits to participants and beneficiaries and paying reasonable plan expenses.

ROBS context

ROBS transactions are sensitive because corporate funding benefits the business while the plan must still be operated for participants and beneficiaries.

Boundary

Not the same as saying the owner may use plan assets for personal or corporate expenses without analysis.

Source basis

ERISA section 404DOL Fiduciary Responsibilities

F

Plain meaning

Fair market value is the price at which property would change hands between willing, informed parties under no compulsion, using an appropriate valuation premise.

ROBS context

ROBS employer stock needs support for initial purchase, annual reporting, redemptions, sale events, and termination decisions.

Boundary

Not the same as the amount the plan rolled over, accounting book value, or a provider estimate without sufficient support.

Source basis

IRS Retirement Topics - Plan AssetsERISA section 3(18)

Plain meaning

A fiduciary is a person who exercises discretionary authority or control over plan management or assets, gives investment advice for a fee, or has discretionary plan administration authority.

ROBS context

ROBS owners often wear corporate, participant, and plan fiduciary hats; role separation matters for conflicts and documentation.

Boundary

Not the same as a service provider or adviser by title alone.

Source basis

ERISA section 3(21)DOL Fiduciary Responsibilities

Plain meaning

A final return is the last required annual filing for a plan or corporation after assets, participants, and operations have been resolved under the applicable filing rules.

ROBS context

A ROBS plan termination or business closure can require final Form 5500-series review for the plan and separate final corporate return review for the C corporation.

Boundary

Not the same as merely deciding to close the business, freeze the plan, change providers, or stop contributions.

Source basis

IRS Form 5500 CornerIRS Terminating a Retirement Plan

Plain meaning

Form 1099-R reports distributions from pensions, annuities, retirement plans, IRAs, and similar arrangements.

ROBS context

A proper rollover, failed rollover, distribution, loan offset, or termination event can create 1099-R reporting questions in a ROBS lifecycle.

Boundary

Not the same as Form 5500 or proof a distribution was non-taxable.

Source basis

IRS About Form 1099-RIRS Rollover Chart

Plain meaning

Form 1120 is the federal income tax return used by C corporations.

ROBS context

A ROBS C corporation files corporate tax returns separately from the retirement plan’s Form 5500-series obligations.

Boundary

Not the same as a plan filing or an owner’s personal return.

Source basis

IRS About Form 1120IRS ROBS Compliance Project

Plain meaning

Form 5500-series returns and reports provide annual reporting and disclosure for employee benefit plans, with forms varying by plan size and type.

ROBS context

ROBS plans may have annual Form 5500, 5500-SF, or 5500-EZ considerations depending on participants, assets, and plan facts.

Boundary

Not the same as a corporate tax return or proof that the plan is compliant.

Source basis

IRS Form 5500 CornerDOL Form 5500 Series

Plain meaning

Form 5500-EZ is generally used for certain one-participant plans and foreign plans that are not required to file electronically on Form 5500-SF.

ROBS context

Some owner-only ROBS plan situations may need Form 5500-EZ analysis, especially around asset thresholds and final filings.

Boundary

Not the same as Form 5500-SF or an exemption from all records.

Source basis

IRS About Form 5500-EZIRS Form 5500 Corner

Plain meaning

Form 5500-SF is a short-form annual return/report available to certain small employee benefit plans that meet the instructions.

ROBS context

A ROBS plan may use or be ineligible for Form 5500-SF depending on participant count, assets, and plan features.

Boundary

Not the same as Form 5500-EZ or an informal small-plan shortcut.

Source basis

DOL/IRS 2025 Form 5500-SF InstructionsDOL Form 5500 Series

Plain meaning

Full vesting means a participant has a nonforfeitable right to the relevant account benefit.

ROBS context

ROBS structures often pay attention to vesting because employer stock and employer contributions must be administered under the plan terms for all participants.

Boundary

Not the same as immediate distribution availability or ownership of corporate assets.

Source basis

IRS 401(k) Plan Fix-It GuideDOL Reporting and Disclosure Guide

H

Plain meaning

A highly compensated employee is a statutory category used in nondiscrimination testing, generally based on ownership or prior-year compensation thresholds.

ROBS context

ROBS founders are often HCEs because of ownership, so employee testing can matter once non-owner employees participate.

Boundary

Not the same as a key employee, officer title, or high salary in ordinary speech.

Source basis

IRS Identifying Highly Compensated EmployeesIRS Common Qualified Plan Requirements

I

Plain meaning

An independent appraisal is a valuation prepared by a qualified party with sufficient independence and support for the stated purpose.

ROBS context

ROBS employer-stock transactions often need independent valuation support, especially for private stock with no public market.

Boundary

Not the same as a provider checklist, tax return balance sheet, or guarantee of adequate consideration.

Source basis

IRS Retirement Topics - Plan AssetsDOL Fiduciary Responsibilities

Plain meaning

The Internal Revenue Code is the federal tax statute containing retirement-plan qualification, rollover, distribution, and excise-tax rules.

ROBS context

ROBS analysis usually requires both IRC tax rules and ERISA fiduciary rules.

Boundary

Not the same as IRS informal web guidance or DOL enforcement authority.

Source basis

26 U.S.C. 40126 U.S.C. 4975

Plain meaning

The IRS administers federal tax law, including retirement-plan qualification, rollovers, corporate tax returns, and correction programs.

ROBS context

The IRS has examined ROBS arrangements and identified recurring issues, but it does not approve a provider or guarantee a specific ROBS transaction through a glossary page.

Boundary

Not the same as the DOL, PBGC, or legal counsel.

Source basis

IRS ROBS Compliance ProjectIRS EPCRS Overview

K

Plain meaning

A key employee is a statutory category used in top-heavy testing, generally involving certain officers, owners, and highly compensated ownership interests.

ROBS context

ROBS companies with owner-employees should distinguish key-employee top-heavy rules from HCE nondiscrimination rules.

Boundary

Not the same as an important worker or manager in ordinary speech.

Source basis

IRS Is My 401(k) Top-heavy?IRS 401(k) Plan Fix-It Guide

M

Plain meaning

A missing participant is a participant or beneficiary the plan cannot locate to deliver benefits or required information.

ROBS context

ROBS exits and terminations should plan for search, notice, distribution, and record evidence if former employees or beneficiaries cannot be located.

Boundary

Not the same as an inactive employee or someone who has forfeited benefits automatically.

Source basis

DOL Missing Participants Best PracticesPBGC Missing Participants Program

N

Plain meaning

Nondiscrimination rules test whether plan contributions or benefits unfairly favor highly compensated employees.

ROBS context

ROBS plans must administer testing for owner and employee participation under the plan terms and applicable rules.

Boundary

Not the same as equal ownership of corporate stock or workplace anti-discrimination law.

Source basis

IRS 401(k) Plan Fix-It GuideIRS Common Qualified Plan Requirements

P

Plain meaning

A participant is an employee or former employee who is or may become eligible to receive plan benefits.

ROBS context

The ROBS founder may be both participant and fiduciary, but employees who meet the plan terms can also become participants with enforceable plan rights.

Boundary

Not the same as shareholder, customer, or corporate officer.

Source basis

ERISA section 3(7)DOL Reporting and Disclosure Guide

Plain meaning

A participant loan is a plan loan to a participant that must satisfy plan terms and tax-law limits to avoid being treated as a distribution.

ROBS context

A ROBS stock purchase is not a participant borrowing from a 401(k); outstanding source-plan loans can complicate rollover planning.

Boundary

Not the same as ROBS funding, SBA debt, or a personal loan to the company.

Source basis

IRS Retirement Plan LoansIRS Rollover Chart

Plain meaning

A party in interest is an ERISA term for persons and entities closely connected to a plan, including fiduciaries, service providers, employers, certain owners, family members, and related entities.

ROBS context

ROBS related-party reviews should identify parties in interest before evaluating stock purchases, service arrangements, leases, guarantees, salaries, redemptions, or sales.

Boundary

Not the same as IRC disqualified person, though many categories overlap.

Source basis

ERISA section 3(14)ERISA section 406

Plain meaning

PBGC is a federal agency that insures certain private defined benefit pension plans and administers programs such as missing-participant services for eligible terminating plans.

ROBS context

Most small ROBS 401(k) arrangements are defined contribution plans, so PBGC insurance is usually not the central ROBS issue, but PBGC materials can matter for missing-participant context.

Boundary

Not the same as IRS or DOL oversight, and not insurance for a ROBS company’s business risk.

Source basis

PBGC AboutPBGC Missing Participants Program

Plain meaning

The plan administrator is the person or entity responsible for plan administration under ERISA and plan documents.

ROBS context

In a ROBS, the employer, owner, committee, TPA, and provider roles should be documented rather than assumed.

Boundary

Not the same as the TPA or recordkeeper unless the plan names or delegates that role.

Source basis

ERISA section 3(16)DOL Reporting and Disclosure Guide

Plain meaning

Plan assets are property held by or for a retirement plan and must be separated from employer, owner, and service-provider property.

ROBS context

In a ROBS, rollover money, employer stock held by the plan, sale proceeds payable to the plan, and participant accounts must be distinguished from C corporation operating cash.

Boundary

Not the same as the owner’s personal money, corporate funds, franchise assets, or a provider’s custody records by themselves.

Source basis

IRS Retirement Topics - Plan AssetsERISA section 403

Plain meaning

The plan document is the written instrument that states the retirement plan’s terms.

ROBS context

ROBS outcomes depend on the actual plan language for eligibility, contributions, employer stock, loans, distributions, amendments, and termination.

Boundary

Not the same as marketing materials, a provider checklist, or the summary plan description.

Source basis

IRS Preapproved Retirement PlansDOL Reporting and Disclosure Guide

Plain meaning

A plan freeze limits future accruals, contributions, or participation according to plan amendments and legal requirements.

ROBS context

Freezing a ROBS plan may be part of an exit or restructuring, but existing participant rights, filings, valuations, and assets still require administration.

Boundary

Not the same as plan termination or shutting down the corporation.

Source basis

IRS Terminating a Retirement PlanDOL Reporting and Disclosure Guide

Plain meaning

The plan sponsor is generally the employer or organization that establishes or maintains the retirement plan.

ROBS context

In the standard ROBS model, the C corporation sponsors the plan that buys employer stock.

Boundary

Not the same as the individual participant, provider, custodian, or franchisor.

Source basis

ERISA section 3(16)IRS ROBS Compliance Project

Plain meaning

Plan termination is the formal process of ending a retirement plan, distributing or transferring plan assets, filing final returns, and preserving records.

ROBS context

A ROBS exit may require employer-stock valuation or redemption, participant notices, final Form 5500-series filing, and rollover/distribution decisions.

Boundary

Not the same as closing the business, changing providers, or selling assets.

Source basis

IRS Terminating a Retirement PlanIRS Form 5500 Corner

Plain meaning

A profit-sharing plan is a defined contribution plan that allows employer contributions under a written formula, even when profits are not the only funding source.

ROBS context

Some ROBS plans combine 401(k) and profit-sharing features to hold employer stock and administer contributions.

Boundary

Not the same as sharing corporate profits directly with owners or employees outside the plan.

Source basis

IRS 401(k) Plan Fix-It GuideIRS Preapproved Retirement Plans

Plain meaning

A prohibited transaction is a barred transaction between a plan and certain related persons or involving misuse of plan assets unless an exemption applies.

ROBS context

ROBS arrangements require careful review of stock purchases, compensation, leases, guarantees, loans, redemptions, fees, and insider transactions.

Boundary

Not the same as a bad business outcome; a transaction can be risky without being prohibited, or prohibited even if profitable.

Source basis

ERISA section 40626 U.S.C. 4975

Plain meaning

Prudence is the fiduciary duty to act with the care, skill, prudence, and diligence a prudent person familiar with such matters would use.

ROBS context

ROBS fiduciaries should document process, valuation support, provider monitoring, participant administration, and conflicts rather than relying on outcome alone.

Boundary

Not the same as hindsight success or provider setup completion.

Source basis

ERISA section 404DOL Fiduciary Responsibilities

Q

Plain meaning

A qualified plan is a retirement plan that satisfies Internal Revenue Code requirements for favorable tax treatment.

ROBS context

ROBS uses a qualified plan capable of accepting rollover assets and investing in employer securities under plan terms.

Boundary

Not the same as a statutory label for ROBS itself or proof of compliant operation in every year.

Source basis

26 U.S.C. 401IRS ROBS Compliance Project

R

Plain meaning

A recordkeeper maintains participant account, transaction, investment, and plan data used for administration and reporting.

ROBS context

ROBS recordkeeping should track rollover assets, employer stock, valuations, employee eligibility, contributions, distributions, and filings.

Boundary

Not the same as the plan administrator, trustee, custodian, or legal adviser unless assigned.

Source basis

IRS Form 5500 CornerDOL Fiduciary Responsibilities

Plain meaning

ROBS is practical shorthand for an arrangement in which eligible retirement assets are rolled into a qualified plan that buys stock of a C corporation sponsoring the plan, capitalizing the business.

ROBS context

ROBS is not a separate statutory plan type; the legal analysis depends on qualified-plan, rollover, employer-securities, corporate, fiduciary, valuation, and reporting rules.

Boundary

Not the same as a loan, grant, IRA investment, IRS-approved product, tax-free guarantee, or provider endorsement.

Source basis

IRS ROBS Compliance ProjectIRS 401(k) Plan Fix-It Guide

Plain meaning

A rollover moves eligible retirement assets from one eligible retirement arrangement to another while preserving tax-deferred or Roth treatment when rules are satisfied.

ROBS context

ROBS funding depends on a rollover into the new qualified plan before the plan buys employer stock.

Boundary

Not the same as a taxable withdrawal, participant loan, or corporate contribution.

Source basis

IRS Rollover ChartIRS ROBS Compliance Project

S

Plain meaning

Self-correction is an EPCRS path that allows certain plan failures to be corrected without an IRS submission when program conditions are satisfied.

ROBS context

A ROBS plan error should be analyzed under current EPCRS rules before assuming self-correction is available.

Boundary

Not the same as ignoring the error, DOL VFCP, or automatic relief from excise taxes.

Source basis

IRS EPCRS OverviewIRS Correcting Plan Errors

Plain meaning

Self-dealing generally describes a fiduciary using plan authority or assets for the fiduciary’s own interest or account.

ROBS context

ROBS owner-fiduciaries should separate corporate decisions, compensation, leases, fees, and stock transactions from fiduciary decisions for the plan.

Boundary

Not the same as simply being both owner and participant; the transaction facts matter.

Source basis

ERISA section 406DOL Fiduciary Responsibilities

Plain meaning

A stock sale transfers ownership of corporate shares rather than selected assets.

ROBS context

If a ROBS plan owns shares, the plan may be a seller or affected shareholder, so proceeds, valuation, approvals, and participant-account treatment need coordination.

Boundary

Not the same as an asset sale by the corporation or a participant distribution.

Source basis

IRS Retirement Topics - Plan AssetsIRS ROBS Compliance Project

Plain meaning

A successor plan is a later plan maintained by the employer or related employer that can affect distribution availability after plan termination.

ROBS context

ROBS exits should check successor-plan rules before assuming participants can immediately roll out assets after a plan change.

Boundary

Not the same as a new provider, amended document, or corporate buyer by itself.

Source basis

IRS Terminating a Retirement PlanIRS 401(k) Plan Fix-It Guide

Plain meaning

An SPD is a participant-facing summary of important plan terms and rights.

ROBS context

ROBS owners with eligible employees need current participant disclosures that match plan terms and operations.

Boundary

Not the same as the full plan document or proof every operation followed the document.

Source basis

DOL Reporting and Disclosure GuideIRS 401(k) Plan Fix-It Guide

T

Plain meaning

A TPA provides plan administration services such as eligibility, testing, contribution, distribution, and filing support.

ROBS context

A ROBS provider may act as or coordinate with a TPA, but service scope should be confirmed in writing.

Boundary

Not the same as the plan administrator, trustee, custodian, attorney, or CPA unless separately engaged or named.

Source basis

IRS Form 5500 CornerDOL Fiduciary Responsibilities

Plain meaning

A top-heavy plan is one where key employees hold more than a specified share of plan benefits, triggering minimum contribution and vesting requirements.

ROBS context

Owner-heavy ROBS plans can face top-heavy issues as employees become eligible.

Boundary

Not the same as a company being too dependent on one customer or owner.

Source basis

IRS Is My 401(k) Top-heavy?IRS 401(k) Plan Fix-It Guide

Plain meaning

A retirement plan trust is the legal arrangement that holds plan assets for participants and beneficiaries.

ROBS context

ROBS documents and bank records should distinguish plan trust assets from corporate assets after the stock purchase.

Boundary

Not the same as the C corporation bank account or the owner’s IRA.

Source basis

ERISA section 403IRS Retirement Topics - Plan Assets

Plain meaning

A trustee holds or controls plan assets under the trust and may have fiduciary duties depending on authority and documents.

ROBS context

ROBS trustees may be involved in approving or documenting employer-stock purchases, valuations, and distributions.

Boundary

Not the same as a recordkeeper, TPA, corporate officer, or custodian by title alone.

Source basis

ERISA section 403ERISA section 3(21)

U

Plain meaning

UBTI is taxable income from an unrelated trade or business that can apply to some tax-exempt entities and retirement arrangements in specified circumstances.

ROBS context

UBTI is usually not the central issue in the common qualified-plan ROBS stock-purchase model; qualified-plan, employer-securities, valuation, fiduciary, and reporting rules are more central.

Boundary

Not the same as corporate income tax on Form 1120 or a reason to ignore prohibited-transaction rules.

Source basis

IRS Unrelated Business Income TaxIRS About Form 1120

V

Plain meaning

VCP is the EPCRS voluntary submission program for correcting certain retirement-plan failures with IRS review and a compliance statement.

ROBS context

ROBS plan document or operational failures may require VCP rather than self-correction depending on facts and current IRS rules.

Boundary

Not the same as DOL VFCP or a determination that the original transaction was lawful.

Source basis

IRS EPCRS OverviewIRS Correcting Plan Errors

Plain meaning

Vesting determines the nonforfeitable portion of a participant’s benefit, especially employer contributions.

ROBS context

ROBS plans must apply vesting schedules in the plan document to eligible employees and owner-participants.

Boundary

Not the same as eligibility, allocation, or distribution availability.

Source basis

IRS 401(k) Plan Fix-It GuideDOL Reporting and Disclosure Guide

W

Plain meaning

Withholding is tax held back from certain distributions; eligible rollover distributions paid to an individual generally face mandatory withholding unless directly rolled over.

ROBS context

ROBS planning typically favors direct rollovers to avoid withholding and 60-day replacement problems.

Boundary

Not the same as final tax liability or proof the rollover was valid.

Source basis

IRS Rollover ChartIRS About Form 1099-R