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ARCHIVED (4/16/20) - April Announcements

The coronavirus crisis has truly hit us at the core of our humanity - our mere existence as human beings and our ability to function in society, aka our finances.  The initial shock to our public health sent the markets on a volatile ride downwards.  After a few weeks, we are starting to learn what to expect from countries who are ahead of us and the US government is looking to step in to help its citizens.  The quarantine is far from over, in fact, coronavirus cases haven’t even peaked yet in most parts of the US, so it may be at least a couple of quarters until the global supply chain reverts back to pre-Coronavirus levels.  In our opinion, it could be at least 12 months for the market to recover from this disruption. 

 So, how can we capitalize on this?

  • Money that’s on the sidelines, this may be a good opportunity to invest it – as long as it’s not for use in the short term.  Remember, we are a financial planning firm, we deal with “long term” planning and definitely do not day trade.
  • It may be a good time to divest large positions with large unrealized gains and reposition them into more diversified managed portfolios.
  • The Feds just cut rates TWICE, so this is a great time to look into refinancing your home.  With so many loan providers offering no-fee refinances, there is no reason not to consider them.  (Remember that starting 2018, only mortgage interest for the first $750K loan is deductible.  This may be a consideration if your loan is greater than $750K).
  • If you are planning on converting your IRA to your Roth, this is a great time to do so.  We typically like to do conversions closer to the end of the year so we have a better idea of your tax bracket.  However, with the market where it is now, this may be the right time to convert.  Consider converting an amount less than what you normally do.  That way, we can always make up the difference later in the year, but you can still take advantage of the low market now.
  • If you are fearful of the market, but don’t want to make any large moves, the best option is to evaluate where you are currently adding to the market.  For example, if you are currently contributing to a 401K, maybe lower the risk tolerance of your future contributions.  Don’t change the investment allocation of the entire 401K account, but just tweak what your future contributions will be invested in.
  • Stay the course.  It’s not really a way to take advantage of this market, but it’s definitely a way to not make it worse.  Think about why we invested in the first place.  Focus your fears on when you actually need the funds you’re investing.

Covid-19 has affected so many people in multiple ways.  Unemployment rate has skyrocketed and the government just passed a massive stimulus plan to help mitigate its effects.  This list is constantly changing as new legislature are being passed every week.  Please check our blog on our website for the latest updates.

  • Many banks will provide mortgage relief.  Each bank is different, so you will have to contact your lender to see how they can help.
  • Many credit cards will provide debt relief.  Each credit card issuer is different, so you will have to contact your credit card company.
  • CA governor orders two months delay on all evictions.
  • Many counties are waiving late fees for property tax.
  • The IRS extended the Federal tax deadline from 4/15/2020 to 7/15/2020.  Each state has their own extension, CA deadline is 6/15/2020.
  • IRA/Roth IRA contributions are now extended to 7/15/2020 to contribute for 2019.
  • The IRS is waiving 2020 RMDs.  If you already took your RMD, you have 60 days to undo it, if you want.
  • The stimulus provides cash for every American taxpayer (even ex-pats).  $1200 for every adult and $500 for every minor.  This amount phases out at $75K – 99K for single and $150K – 198K for married filing jointly.
  • For small businesses, the CARES Act will help the employer cover payroll for 8 weeks.

Be forewarned that first quarter statements are likely currently sitting in your mailbox.  It'll be scary.  But history has taught us that this too shall pass.  Remember why we invested in the first place.  Focus on the purpose of your accounts and not just the dollar value.  Of course, if you have questions or concerns, I’m just a phone call or email away.  Please reach out.

A couple of tax related items:

  • You should have all of your tax statements by now.  If you're missing tax statements, please let us know!  As a reminder, you should NOT be expecting 1099s from any retirement accounts UNLESS you withdrew from an IRA/Roth or converted from an IRA to a Roth IRA last year.
  • If we used the Back Door IRA Strategy* last year, please remember to tell your CPA.  You must file a Form 8606 to let the IRS know the IRA contributions were non-deductible, so therefore the conversion is only taxed on the gains.
  • Updated contribution deadlineds due to the COVID (deadline relevant to 2019 tax year only)
    • 2019 IRA or Roth IRA - 7/15/2020.
    • 2019 Defined Benefit Plan - 1/1/2021.
    • 2019 Profit Sharing Plan - 7/15/2020, or 9/15/2020 if you filed an extension.
  • AssetMark and Pershing have partnered with Turbo Tax.  So, if you have an account with them, you will be able to automatically import your tax info directly into Turbo Tax.  Not only does it save time, but can also help reduce potential errors! 
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Check the background of this financial professional on FINRA's BrokerCheck