Structuring a Tech Startup in a ROBS 401k Retirement Account Vs.?

[Rav Ram]

Dear BP Community,

If you want to significantly grow a Roth 401K by investing in a high-risk startup that you will be heavily involved in on a day to day basis as an officer, what options exist to accomplish this? I know that Max Levchin (founder of Yelp) and Peter Thiel (Founder of Paypal) have both used Pensco to invest their Self Directed IRA's into the companies the started and grew their IRA's to Hundreds of Millions of Dollars. However, how did they do it without running afoul of the Prohibited Transaction Rules, Disqualified Person Rules, Self Dealing Prohibited Transaction by serving as an officer or director or highly compensated employee and investing the money back into their own company?

Again, if you are going to play a significant role in the business, how can you invest your Roth 401K? I don't know how the guys above did it, but the only option that seems to make sense to me is the ROBS (Rollover as a Busines Startup).  Assuming that you are going to be setting up a C Corp anyway because most tech startups are setup this way if they are going to have a large number of shareholders, the ROBS solution sounds appealing, until you get into the details.  Once you hire a lot of employees, or if you are trying to really grow the business and maintain your ownership using the ROTH 401K, it appears to be problematic.

I was wondering if anyone had heard of a successful way to invest their money when they are also involved in the business (like a tech startup) where they will eventually have outside investors, partners or employees!

Thank you

I only see 2 options.  Invest in someone elses startup with your Roth 401k that you are not participating in as a significant player or if you are a significant player in that business, perhaps do a