Frank Selden is a tax attorney. He’s the founder of 401k ROBS Pros. He’s one of the foremost experts in the country on Rollover Business Startups, which is what ROBS’s stands for. He’s helped thousands of people find the right funding to start their businesses. His desire to help people comes from a passion to make a positive difference. He was a member of the Army National Guard and he provided relief to those in need. As a personal banker, a loan officer, he aided people in sound investment strategies. As a tax attorney, he has advised people on legal ways to protect their assets. And now as a ROB’s provider, he helps entrepreneurs fund their business ideas with qualified retirement plans tax-free.
Frank grew up in a Dutch Dairy Farm Community where spent most of his life until his early 30s. He didn’t really like it very much so he decided to go off in a different direction. He joined the Army National Guard and became a bank officer with a bank in the Pacific Northwest in Watkin County where most of my family is, and really enjoyed the banking career and tell it went through a reorg shuffle where I didn’t lose my job, but they basically took all the fun out of it. And a lot of the commission’s so I was making a lot less money, I kept the same title. But most of my authority was gone. And I decided I didn’t want to play that game anymore. And at the age of 40, I went to law school, use my experience in banking to essentially get involved in self-directed IRAs and rollover business startups right from the very beginning right after law school, and I’ve been doing that ever since.
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Understanding Rollovers for Business Startups With Frank Selden
Brett:
I’m excited about our next guest. He is a tax attorney. He’s the founder of 401k ROBS Pros. He’s one of the foremost experts in the country on Rollover Business Startups, which is what ROBS’s stands for. He’s helped thousands of people find the right funding to start their businesses. His desire to help people comes from a passion to make a positive difference. He was a member of the Army National Guard and he provided relief to those in need. As a personal banker, a loan officer, he aided people in sound investment strategies. As a tax attorney, he has advised people on legal ways to protect their assets. And now as a ROB’s provider, he helps entrepreneurs fund their business ideas with qualified retirement plans tax-free, which is our favorite phrase, please welcome to the show with me, Frank Selden. Hey, Frank, how are you doing today, sir?
Frank:
Doing very well. Thank you, Brett. Appreciate you having me on the show.
Brett:
Absolutely. For our listeners to get to know for the first time, would you give us a little bit more about your story and your current focus?
Frank:
Grew up in a Dutch Dairy Farm Community. So I spent most of my life until my early 30s, actually, around that community. And then actually admitted to my family, I didn’t really like cows very much. So I decided to go off in a different direction. I joined the Army National Guard and I also became a bank officer with a bank in the Pacific Northwest in Watkin County where most of my family is, and really enjoyed the banking career and tell it went through a reorg shuffle where I didn’t lose my job, but they basically took all the fun out of it. And a lot of the commission’s so I was making a lot less money, I kept the same title. But most of my authority was gone. And I decided I didn’t want to play that game anymore. And at the age of 40, I went to law school, use my experience in banking to essentially get involved in self-directed IRAs and rollover business startups right from the very beginning right after law school, and I’ve been doing that ever since.
Brett:
Amazing. Looking forward to dive into a little bit more about what you learned over the years. But by the way, you can learn more about Frank Selden at 401krobspros.com. But before we go there, Frank, people call you Rob all the time, right?
Frank:
Amongst other things, yes. One of the very few people I’ve talked to, by the way, Brett, whoever says that tax attorneys are some of their favorite people.
Brett:
Yeah, no, these are from the smartest, coolest people ever. I really, they really are. So yeah, so Frank, I want to take our listeners to go back before your career days, I wanna go back to the high school at the University days, maybe the dairy farm days, you’re on the dairy, and mom and dad are our you know, hopefully speaking life into you and talking about your gifts and talents they believe you’ve been given. And so I think we’ve all been given certain gifts and these gifts were given to us to be a blessing and help to others. Some people call them strengths, some people call them superpowers, I’m curious about one or two gifts that you believe you are given, and how does that help how you help him bless people today?
Frank:
That is such an awesome question. What immediately comes to mind is a meeting I had at a conference one time I was actually learning how to talk to people. I wasn’t very good at that. Communicating with cows and talking to people is a different skill. I joined Toastmasters as a member for quite a few years love that organization. That is a Toastmaster conference where the speaker encouraged all of us to chat with our neighbors for a few minutes and just get to know them. So we would say things like hi, how are you today and just break the ice and come up with something at the end of that conference. One of the people that I had talked to came up to me afterward and said there was something different about me that when I asked her, how are you? It felt like I really wanted to know the answer. That stumped me in some sense because I thought everybody did. Why would they ask that question if they don’t really want to know the answer? The reality is that most people don’t. When they ask questions like that, I think that my gift is that I really do care. I do want to know the answer. And that comes into how even we create rollover business startups for people. We do not create a custom cookie-cutter approach for lack of a better term, like some of the rubs and motion companies, we actually listen, we care what the answers are. And we create custom solutions for each one of our clients in an industry where that is not known. So, I think you’re exactly right, that gift or that, and I don’t really think of it as a gift. It’s just part of who I am. It’s part of what makes me, but it’s also part of our company.
Brett:
Absolutely love it, the deep care and empathy for people and actually caring and listening. Well, is that a fair summary?
Frank:
Yes. And sometimes it sucks, by the way. Sometimes caring sucks, and it hurts. And you know, but that’s the ups and downs of life. And it’s not like I can turn this off. It’s their weather. Sometimes I’ve actually thought, No, this isn’t a gift. It’s a curse. So yelling in old Greek fashion up the mountain tops of the at the gods who might curse humans with these kinds of things. But it really is a gift. And I really appreciate you both reminded me of that. And you know, bringing that to light, it is a gift, when I think of it that way. Use it that way. It certainly can be and it is part of whatever into the world. It’s part of me.
Brett:
Love it. Frank, thank you so much for sharing that it means a lot to me. And I know my listeners as well. So now let’s dive into some strategies here to use your 401k or IRA to finance your business, your own business. So what’s the biggest secret Frank when it comes to using your 401k or an IRA, to finance your own business?
Frank:
The secret of the IRS one is to get it right according to the rules. One may not, for example, invest their IRA directly into their own business. We can use IRAs IRA funds in this strategy. But what it requires is a creation of a corporation. If a client has a corporation already, we can use it, that corporation is going to sponsor a 401k plan for the benefit of all of its employees. The client is going to be an employee of that Corporation, they are allowed to be the only employee, they then have a right to transfer those qualified funds into this new 401k plan, which must be properly crafted to allow the plan to invest into the stock of the sponsor and employer, even though that stock is not publicly traded. So that’s essentially what we’re creating for people as a mechanism through which they can then transfer the qualified funds into the plan then invested from the plan into the Corporation for stock. The plan then owns that stock, not individuals themselves, as is proper for any plan investment that is continuing to grow for them in a tax-deferred status. And we can get into what happens with capital gains or investment income or dividends and things like that related to the plan investment. But that’s essentially the strategy Corporation 401k plan invested into the company for stock the corporation is then allowed to use those funds for whatever corporations are allowed to use the money for our existence, buy a franchise, start a restaurant, whatever.
Brett:
Excellent. And what’s the best secret for the client? What’s the outcome for them? Why would somebody want to do this versus just you know, getting financing and raising funds in a different way?
Frank:
The top two reasons I believe that people want to do a ROB strategy number one is because they really don’t have anything else available to them. Sometimes funding it’s a little hard to get maybe their credit isn’t where they want it to be. Or they don’t want to burden their business with loan payments right off the bat. So they want to do a cash investment to get their business up and running. They only need whatever we do deals as low as like 50,234, sometimes all the way up to a million, but they want to make this cash investment they want to start a court company off without having to make payments. But there are only two places they have cash one is in their house. So they could get a second something like that, which is again creating the debt or they have it in their retirement plans, but they do not want to take a taxable distribution out of their plan in order to fund their business. And this way that’s growing tax-deferred.
Brett:
Excellent. So some tax advantages not having to go into debt, they may not have another option, you don’t necessarily want to go into more debt either. So I don’t want to burden your other business. So that makes a whole lot of sense. Can this be combined with SBA financing, and SBA is like for those who are listening, these are government-backed or sponsored or incentivized loans for people that are starting a small business or buying a property of which they’re going to be occupying the property of 50%, or more of that asset. Any thoughts on that, Frank?
Frank:
Absolutely. 25 to 30 or so percent of our clients are playing this with a small business loan. In an SBA loan, the client is required to bring 20% or more of the capital of the deal to the table. That’s their own personal funds. Again, a lot of time, they might not have that much money, sitting around after-tax and saving something like that the two places they have to get it is more dead in their house or tapping into the retirement plan. A lot of our clients are thus using the rock structure to actually meet the requirement that the SBA has to come up with 20% of the funds. So the fact that the plan is going to own those shares, rather than them personally, is not as big of a concern to the SBA, they do credit this to the individual as them coming up with the money themselves, even though technically they don’t own the stock. Does that make sense?
Brett:
It does and what I’ve learned with you know, some stuff that can be a little bit complex is the reason why there are professionals to guide you along the way. And by the way, you can learn more about Frank Selden at 401krobspros.com. And it’s not just the structure, it’s the team of professionals to help execute the structure and the strategy along the way. Any thoughts on that, Frank?
Frank:
I 100% agree with you. I believe are the best in the country, are we doing creating rollover business startups, but we’re not the best in the country, really anything else. So we still love it for our clients to have a CPA, we love for our clients to have a local attorney, we love our clients to have financial advisors, perhaps one of the podcasts I’ve heard that you have done earlier was on the coach. And some of the things that she had to say about her clients I thought were pretty phenomenal. I don’t know that I would put a business coach or personal coach at the top of the list. But it’s, that’s another resource that people can tap into as well. Because a lot of times, believe it or not, we don’t know everything. When we’re starting a business, I would love to have to hand all of our clients a crystal ball. And all they had to do is just rub it on a daily basis that would tell them exactly what they need to know for that day. I’ve never been able to find a working model of one of those. So we do the best we can. And the best we can really have these kinds of competent professionals that we can rely on in these different aspects of what business ownership, the complexity, business ownership really entails.
Brett:
Very well said. I’m building like a dream team. Especially sometimes I feel like we’re in the industry, Frank, where we’re like these Roman soldiers, we have all of our shields and then we have like the little spear that comes out of the shield, and then the clients in the middle and we’re all each of us and our specialties are lining up to provide like a safe harbor in the middle. So, the financial advisors, commercial real estate professionals, luxury realtors, CPAs, local CPAs are helping them on a local level. And then the more advanced tax attorneys helping them like what you’re doing to finance their 401k or IRA for their next business venture. And then a deferred sales trust for we’re doing on the capital gains tax stuff and its niche focus, and the more you can niche and specialize, the higher level of service you can provide. Is that a fair summary, Frank?
Frank:
Totally. I really get that sometimes what we’re dealing with, unlike say, the Huns of the Roman army, or protecting an officer in the army, is sometimes we’re dealing with at least in our business all a lot of times the IRS and the Department of Labor. So they’re not looking to kill our clients, but they are making sure that they want to play by the rules. And that’s the mentality that we have if we’re ever dealing with the IRS or the DLL world. on the same side, we want to be compliant. I don’t want to be setting these up for people who are trying to skirt the rules and do things are not allowed to do. That’s the kind of business that we really don’t want. But we’re certain we have very creative clients who are willing to put their toes right on the edge of the line. You know, our job is to keep them safe. You’re exactly right.
Understanding Rollovers for Business Startups: “The house you looked at today and wanted to think about until tomorrow may be the same house someone looked at yesterday and will buy today.” – Koki Adasi
Brett:
Yep. Makes sense. So excellent. And so, let’s shift a little bit going to the capital gains tax side of things. So we focus, like a laser on capital gains tax solutions. And we try to bring the top five or six mainstream ones that have been proven. And then kind of lay it out for the client, have a conversation, listen with empathy, find out what they want their clear outcome to be, and then see, is it a 1031exchange? Is it a Delaware Statutory Trust? Is it a charitable trust? Is it a deferred sales trust? Isn’t it a traditional seller carry back? I mean, whatever it might be, is in an opportunity zone, there could be a number of things. But try to give them clarity on that. And now we focus like a niche on the deferred sales trust to help them execute when they go to use that. But my question is, what’s the biggest frustration that you’ve seen for your clients yourself? When it comes to capital gains tax deferral options and or the 1031? Exchange?
Frank:
Let’s touch on the frustration, I’ll definitely answer your question that also accused me of maybe we can also do the flip, which is one of the best strategies that I’ve seen in Rob’s, which it’s actually rather well known. I think I would hope we could have a few minutes talking about that. As far as frustrations, we are dealing with the corporate tax code, and we’re dealing with qualified accounts. So we don’t have a lot of flexibility there. When a client of ours, it’s using their 401k IRA or whatever qualified funds to invest in their company plan, say owns 90% of the stock, they then build that business up and say it gets 10 times the original investment. So they invest $100,000, that plan stock is now worth a million, they sell their million-dollar company, and they are putting that increase that $900,000 back into the plan. When that happens, the plan does not pay any taxes on that game. Just like any 401k plan investment, that is growing tax-deferred for the individual until they take a distribution from the plan. Now down the road, when they take that distribution, they are going to pay ordinary income tax on that $900,000. And some people do not like that reality. And they would find that as a frustration, why am I paying ordinary income tax on $900,000, that was a capital gain. It’s because the shareholder owns that 401k plan as a shareholder owns that stock and that’s how 401k plans work. Now on the flip side, well, before I get to the flip side, a lot of our clients don’t make that kind of return. They might be paying themselves out income over time, their stock really isn’t growing, they start a restaurant or whatever. And maybe it sells for a little bit more, they make some kind of gain on it. But that’s not their big concern. The people who we have as clients know going forward that their idea is going to make a lot of money for their plan as a shareholder for their own retirement. Rather than having those funds in a pre-tax status for the investment into the corporation. They will do a Roth conversion inside the plan or transfer Roth 401k money into the plan, we cannot transfer Roth IRA, we can do a Roth component of another plan or pre-tax money and convert it to a Roth. They then buy the stock and Eros status then they grow 10, 20, 30 times their company, and all of that is now pulled out tax-free for themselves down the road. And that is a strategy I’ve seen work several times for people.
Brett:
Excellent. By the way, you can learn more about Frank at 401krobspros.com. So now, we want to touch on the flip, is that was that what you just explained?
Frank:
That was the flow is to do a Roth component and then you’re pulling those funds out of the plan tax-free. Now, most people who are doing a Rob’s one of the reasons they do this. So, they cannot afford to put their money into raw status because they’d be paying the taxes on it. And completely negating the whole reason they can’t go Rob’s in the first place. The people that do that successfully, generally tend to be consultants, types of companies that don’t need a huge cash investment up front. Not a lot of infrastructure, for example. So there might be transferring in $30,000,$40,000, $50,000. But converting it to Roth, paying the taxes on that amount of money, and then growing their businesses in a really huge way.
Brett:
Got it. Excellent, Frank. Thanks. Thanks for breaking that down. That being said, Are you ready for the lightning round?
Frank:
Absolutely. It was Jeopardy here.
Brett:
Yes, sort of. Knowing what you know now, Frank, if you go back to your 25-year-old self, what’s the one Golden Nugget you would make sure to tell yourself to do?
Frank:
Back when I was 25, I was more involved in doing what other people or what I perceived other people wanted me to do, or thought I should be doing my life rather than leading my own life and knowing what I wanted to do for myself. The reality was I already knew back at the age of 25, and didn’t like I was I didn’t need to wait for another five, seven years. So I would just go back to myself and say, figure out what’s really inside of you would say to myself back then know what is inside of you, and go do that. Whatever that is. Go do that. And hopefully, I would listen. There might have been people back then that told me that and but I ever doubt he didn’t listen until you know, later, when the frustrations grew. And it’s like, I just can’t do this anymore. It’s not me.
Brett:
Got it. Take your dreams, take your passions and run sooner. Love it. What’s the number one book you’ve recommended or gift at the most in the past year?
Frank:
Brett:
Excellent. Give me a mobile or digital resource you recommend for your business?
Frank:
The one I use most as a mobile or digital resource, LinkedIn.
Brett:
Excellent. Favorite leadership quote or theme that you strive to live by?
Frank:
Lead from the front of my example.
Brett:
Excellent. What are you most curious about right now?
Frank:
When is the British Virgin Islands going to open up that we can go snorkeling with our boat?
Brett:
Good question. I was just in Florida this last week and went to Annamarie Island. And we’re looking over at the Virgin Islands. We didn’t get there. But anyway, that’s a great question. I’m curious about that, too.
Frank:
I moved to Puerto Rico in January. And I can see St. Thomas from here. And I can go there not a problem with going to the US Virgin Islands. But my favorite snorkeling spots in the BVI. Can’t see that from here. But yeah, they’re so excellent.
Brett:
What’s the number one best-kept tax secret for living in the Virgin Islands?
Frank:
I don’t know about the Virgin Islands, Puerto Rico has its own tax base. Since it’s not a state yet, at least, Congress is still sorting through whether Puerto Rico is going to be a state. But right now, Puerto Rico residency with a Puerto Rico combination of having your own company here in Puerto Rico is a 4% tax rate.
Brett:
And when you say to have your own business in Puerto Rico, meaning you just opened up the corporation inside of Puerto Rico, but you’re doing business in all 50 states or wherever, but is that what you’re saying there?
Frank:
Absolutely. So back when I lived in Washington and my 401k perhaps froze was a Washington, LLC. Actually, it still is I’m just starting the process of creating an LLC here in Puerto Rico, it’s actually not quite as easy as going online, like Washington State and paying 200 bucks, and boom, you got an LLC. It’s a bunch of steps to get through. But when you’re done with all those steps, and you have a Puerto Rico company or Puerto Rico resident you’re at a 4% tax base on distance income, zero protect percent tax base tax rate on capital gains.
Brett:
That’s phenomenal. What do you miss most about living in the states versus living in Puerto Rico?
Frank:
I don’t. My mom might be stunned to hear me say this, but vegetables. We don’t have any here. Other than planned paints we have a bunch of but they’re not really a vegetable. The only vegetables we have coming in. It’s like all the restaurants are the same vegetables. It’s carrots, it’s cauliflower and it’s broccoli and they’re all frozen.
Brett:
Got it. Do you ever see yourself moving back to the states or you feel like, I’m here for life?
Frank:
I believe I’m here for life. I believe I will visit the states, family, etc, a month or two out of the year, but I have no plans on moving back.
Brett:
Excellent. Love it. That’s we’ve been taking a peek at the Virgin Islands and Puerto Rico. Just looking at the ideas based upon you know, we’re living in California who’s not right, these days. So, Frank, I want to thank you for being on the show. For our listeners who want to get in touch with you. What’s the best place for them to find you might have one more time?
Frank:
Go to the website 401krobspros.com, there is a way to book some time directly on my calendar to green schedule button click on my calendar, this 30-60 minute appointment or at no cost. We also have an E-book that talks about how we put rollover business startups together that is also free on the website.
Brett:
Awesome, Frank. Well, this is Frank Selden, I want to thank you for being on the show. And for sharing a part of your story. I want to encourage you to keep you know, caring for people listening well, and providing great solutions to help them you know, unlock businesses in properties that otherwise they wouldn’t have had if it wasn’t for your service of Rob’s. So, thank you, Frank, for being on the show. And that also wraps up on another show. I want to thank our listeners for listening to another episode of the capital gains tax solutions podcast. As always, we believe most high net worth individuals and those who help them they struggle with clarifying their capital gains tax deferral options, not having a clear plan is the enemy, and using a proven tax deferral strategy, such as the deferred sales trust is the best way for you to exit your highly appreciated cryptocurrency, investment, real estate, primary home, we just saved another failed 1031 exchange last week. If you have that we can defer the tax using the deferred sales trust, you can go to capitalgainstaxsolutions.com to learn more about that. We are also streaming on Expert CRE Secrets. So it’s important to know for clients different ways to unlock capital to buy more properties. And Frank says you can do that with an SBA loan coupled with the 401k plan using Rob’s so check out Frank and get there and help your clients out. Thanks so much, everyone for listening and we appreciate you please rate review, subscribe.
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About Frank Selden
He is one of the foremost experts in the country on Rollover Business Startups (ROBS) and tax attorneys. He helped thousands of people find the right funding to start their businesses.
His desire to help people comes from a passion to make a positive difference. As a member of the Army National Guard, he provided relief to those in need. As a personal banker and loan officer, he aided people in sound investment strategies. As a tax attorney, he advised people on legal ways to protect their assets. And now, as a ROBS provider, he helps entrepreneurs fund their business ideas with qualified retirement plans; tax-free. When he’s not in the office, he enjoys spending time with his children and grandchildren. He is also an avid sailor who loves exploring the majestic waters of The Caribbean and the Pacific Northwest.
