4th Quarter News and Opportunities
Schwab and TD Ameritrade Eliminate Commissions – Early this month, Charles Schwab & Co and TD Ameritrade both announced that they would be eliminating commissions for US Stocks, ETFs and Options (although for options, a contract fee still applies). This allows WESCAP greater flexibility in trading and selecting the optimal funds for client portfolios. For more information, please see the disclosures below:
Mortgage Rates – with recent Fed rate cuts, mortgage rates have hit new lows for the year, with many lenders offering rates on 30-year fixed mortgages between 3.5% – 3.75%. Now may be an opportune time to consider refinancing if your rate is considerably higher, keeping in mind, there are fees associated with refinancing. If you have any questions regarding refinancing, please contact your WESCAP advisor.
Qualified Charitable Distributions (QCDs) – For those individuals over the age of 70½, if you normally make gifts to charities, one strategy that is worth considering is the use of Qualified Charitable Distributions (QCDs). A QCD is a direct transfer from your IRA account to a qualified charity of your choice. However, what makes these special is the fact that not only does the distribution count as part of your Required Minimum Distribution (RMD), but the total amount you donate is excluded from your taxable income. This has shown to be especially useful for individuals who no longer receive the charitable deduction from itemizing under the Tax Cuts and Jobs Act. QCDs do, however, come with specific requirements (minimum age, distribution rules, etc.) which should be reviewed in detail before considering this strategy. For more information please refer to our previous blog post.
Qualified Opportunity Zone Funds – Back in May, we discussed utilizing Qualified Opportunity Zone funds as a useful tool to not only defer taxes, but to reduce the tax owed on realized capital gains if held long enough. If you have a significant realized capital gain in 2019 or expect to have one, this still may be an advantageous strategy to pursue before year-end. For more information, please see our previous blog post below, or contact your WESCAP advisor for a more in-depth discussion.
Solo 401(k) – There is still time to open a Solo 401(k) account for 2019. A Solo 401(k) is designed for self-employed individuals with no employees. One exception to the no employee rule is a spouse. A spouse can also have an account with the same contribution limits. In 2019, you can contribute up to the lesser of your total earned income for the year, or $56,000 with an additional $6,000 catch up if 50 or older between elective deferrals and employer contributions (maximum elective deferral in 2019 is $19,000). These contributions will reduce your taxable income in the year in which they are made.