Homrich Berg Financial Planning Update

By Ross Bramwell



We hope this message continues to find you in good health and enjoying quality time with your family in these unusual times. Our team continues to be laser focused on helping you and your family navigate all aspects of this current environment. To that end, we believe that the current pandemic, and the government response, has created a unique environment for financial planning. Below are a few financial planning items to be aware of during this crisis. Please reach out to your client service team if you would like to discuss how any of the ideas below may apply to your specific situation.


First, a word of warning about Coronavirus related scams. There has been an uptick in the number of scams recently, some playing off COVID-19 fears. Specifically, be on the lookout for the following:


1) Watch for emails claiming to be from the CDC or WHO. Use sites like www.coronavirus.gov and https://www.cdc.gov/coronavirus to get the latest information.


2) Fake websites, products, and virus tests – Ignore online offers for vaccinations, at-home test kits, or products claiming to cure the virus.


3) Real websites with fake products – Amazon, Walmart, and others have third party sellers that may market tainted, damaged, used, expired and otherwise unsafe products that are in high demand because of the coronavirus. Pay attention to who is selling you a product.


4) Fake fundraising — Unfortunately fraudsters use a crisis to raise money for a supposed victim of coronavirus or a charity group claiming to serve these victims. You can use GuideStar or Charity Navigator to vet charities. We plan to have a HUB blog post soon on our website with some suggested charities as a starting point.


Now let’s review some strategies on how you may be able to benefit from the current market downturn and opportunities created in the government response:


1) Mortgage Refinance – We will continue to look for opportunities to see if refinancing your mortgage may be beneficial. As the pandemic spread, interest rates declined and have stayed near historic lows. As rates declined, banks were flooded with refinance inquiries and in many cases were unable to keep up with demand. However, we expect that the opportunity to refinance will be here for a while as we do not expect rates to move much higher quickly given the current economic situation.


2) Roth Conversions – A conversion from a traditional IRA to a Roth IRA when account values are lower can reduce the taxes owed. You may have received a tax deduction when funding the traditional IRA, but if you did then the funds are fully taxable upon withdrawal. A Roth IRA is the opposite; it is funded with after-tax dollars, and withdrawals (including growth) are tax free. A Roth Conversion is a taxable event in the year in which it is done. Because of the different tax treatment, a Roth Conversion may be advantageous for you now with lower account balances due to the market decline. Also, traditional IRAs are subject to Required Minimum Distributions (RMDs) starting at age 72. Roth IRAs don’t have RMDs during your lifetime, so your money can stay in the account and keep growing tax-free. Remember that all RMDs in 2020 have been waived, which could make 2020 an even more attractive time to do a Roth conversion for some investors.


3) Accelerate funding of 529 or IRA (or other tax-deferred accounts) – If you are saving in a tax deferred vehicle for education or retirement on a monthly basis, consider a lump sum to fund the next several months of contributions. By doing this, you will be buying into more equity exposure while the market is down. This would be most beneficial if your account is allocated mostly in equities, and you have several years before the funds are needed.


Disclosures: The information reflects Homrich Berg’s views, opinions and analyses as of April 19, 2020. The information is provided for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any investment product. The information does not represent legal, tax, accounting or investment advice; recipients should consult their respective advisors regarding such matters. Certain of the information herein is based on third party sources believed to be reliable but which have not been independently verified. Past performance is not a guarantee or indicator of future results; inherent in any investment is the risk of loss.