{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-funds-from-a-retirement-account-like-a-401-k-be-used-for-my-equity-injection-if-rolled","api_url":"https://dealroom.so/api/public/questions/can-funds-from-a-retirement-account-like-a-401-k-be-used-for-my-equity-injection-if-rolled","question":"Can funds from a retirement account, like a 401(k), be used for my equity injection if rolled into a new C-corp via a ROBS plan?","topic":"Down payment & equity injection","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, funds from eligible retirement accounts can be used for equity injection through a Rollover as Business Start-Up (ROBS) plan, provided it adheres to IRS and SBA guidelines.","rule":"SBA allows equity injection from a ROBS plan if structured properly, typically involving the establishment of a C-corporation that purchases the assets of the new business, with the retirement funds invested in the C-corporation's stock. The plan must comply with ERISA and IRS regulations to avoid prohibited transactions and taxation issues.","example":"A buyer needs $100,000 equity. They roll $100,000 from their 401(k) into a new C-corp, which then purchases the business. The C-corp issues stock to the buyer, representing their equity.","what_lenders_check":"Lenders will scrutinize the ROBS plan's compliance with IRS and ERISA rules to ensure the funds are truly unencumbered equity and not a disguised loan. Proper documentation of the plan's setup and funding is critical.","required_facts":["Retirement funds","ROBS plan compliance","C-corp structure","IRS and ERISA rules","Unencumbered equity"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","SBA 7(a) Loans Overview"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"},{"title":"SBA 7(a) Loans Overview","url":"https://www.sba.gov/funding-programs/loans/7a-loans"}],"related_questions":[{"question":"Can I use retirement funds from a 401(k) as equity injection for a $750,000 business purchase?","url":"https://dealroom.so/sba-7a/questions/can-i-use-retirement-funds-from-a-401-k-as-equity-injection-for-a-750-000-business-purchas"},{"question":"Can funds from a home equity line of credit (HELOC) be used as my equity injection for a business acquisition?","url":"https://dealroom.so/sba-7a/questions/can-funds-from-a-home-equity-line-of-credit-heloc-be-used-as-my-equity-injection-for-a-bus"},{"question":"Is it possible to use a second mortgage on my personal residence as an equity injection for a $1.5 million business acquisition?","url":"https://dealroom.so/sba-7a/questions/is-it-possible-to-use-a-second-mortgage-on-my-personal-residence-as-an-equity-injection-fo"},{"question":"How much cash must I personally inject for an SBA 7(a) business acquisition?","url":"https://dealroom.so/sba-7a/questions/how-much-cash-must-i-personally-inject-for-an-sba-7-a-business-acquisition"},{"question":"What are the acceptable sources for my cash equity injection beyond personal savings?","url":"https://dealroom.so/sba-7a/questions/what-are-the-acceptable-sources-for-my-cash-equity-injection-beyond-personal-savings"},{"question":"What is the SBA's minimum required equity injection percentage for a business acquisition?","url":"https://dealroom.so/sba-7a/questions/what-is-the-sba-s-minimum-required-equity-injection-percentage-for-a-business-acquisition"}],"related_terms":[{"term":"401(k) Retirement Fund","url":"https://dealroom.so/glossary/401-k-retirement-fund"},{"term":"Retirement account funds","url":"https://dealroom.so/glossary/retirement-account-funds"},{"term":"Retirement account","url":"https://dealroom.so/glossary/retirement-account"},{"term":"401(k) plan","url":"https://dealroom.so/glossary/401-k-plan"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"term":"Minimum Equity Injection","url":"https://dealroom.so/glossary/minimum-equity-injection"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/can-funds-from-a-retirement-account-like-a-401-k-be-used-for-my-equity-injection-if-rolled","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}