Client Memos

Gamble Jones response to “Stay at Home” order

Dear Valued Gamble Jones Client,

Last night California Governor Gavin Newsom issued a statewide “Stay at Home” order that limits non-essential movement for residents.  We will be closing our physical office today at 1:00 PM PST, and it will remain closed until the order is lifted.  While the physical office will be closed, every Gamble Jones employee will be working remotely, and we remain well situated to facilitate all our client needs.

The fastest way to communicate with us will be via email.  However, if you call into our office (626-795-7583), you will get our answering machine and can enter the extension of the person you are trying to reach (see extensions below).  Please leave a message, and the recipient will automatically receive a notification email and return your call asap.

For those clients who have been receiving portfolio statements from us via the mail, we ask you to use your custodian statement while our physical office is closed.  We will send hard copies of our statement once we are able to return to our office.  Please log on to our website at GambleJones.com (under Client Memos) for future notifications and information.

During this extraordinary time, we remain your trusted partner.  We take our role as a fiduciary for our clients very seriously and will always act in your best interest.  We hope you and your family stay safe and healthy. 

 

Blessings,

Alison Gamble, President

 

Gamble Jones Employee Phone Extensions:

 

Ashley Guerra           126                                         

Michael Erskine        119

Alison Gamble          111                                          

Natalie Perez             139

Aram Schotts            146                                        

Peter Viehl                136

Bridget Goodbody   145                                         

Rebecca Occhiline 110

Colby Hackerman   135                                         

Rob Souza                 125

Dennis Slattery         131                                         

Scott Phillips             143

Justine Fonseca       132                                         

Tap Le                        121     

Katie Roth                 127                                         

TJ Jones                    134

Kristen Mitchel         141                                         

Tom Jones                122

529 Savings Plans

Student loan debt just passed the $1.6 trillion mark earlier this year, and education costs are expected to continue to increase much more quickly than general inflation and wage growth.

Of the tools available to help families save for education expenses, the 529 plan is one of the best.

What is a 529 plan?

Formally known as a qualified tuition program (QTP), a 529 savings plan is a financial account designed to help save and grow assets in order to pay for “qualified” education expenses.

Which costs are considered “qualified” higher education expenses?

  • Tuition and related fees
  • Books, supplies, and equipment necessary for class
  • Computers and peripheral equipment (e.g., monitor, keyboard, mouse), educational software, and internet access
  • Eligible room and board expenses

What are the primary benefits of the plan?

  • Plan assets may be allocated to mutual funds and ETFs.
  • The investment earnings within the plan are tax-deferred and tax-free when used to pay for “qualified” education-related expenses.
  • The owner maintains control over the assets and can change the beneficiary.
  • The plan gives the owner the ability to remove assets from his/her taxable estate as contributions to the plan are considered a completed gift.
  • Some states provide a tax credit or deduction for contributing to a state-sponsored 529 plan. You may be required to use the state-sponsored 529 plan to qualify for these tax incentives
  • Investment gains within a 529 plan and plan distributions are not subject to the 3.8% Net Investment Income Tax (NIIT).

Can 529 plan assets affect Federal Student Aid eligibility?

Yes. Both the 529 plan’s account balance and the distributions can affect the student’s ability to obtain federal student aid. The extent of the affect depends on the owner’s relation to the student and the student’s dependency status. There are many moving parts to 529 plans and financial aid planning, so please call us with your questions.

Can I use 529 plan assets for K-12 education expenses?

Prior to the 2017 Tax Cut and Job Act, the IRS’ definition of qualified education expenses included only those expenses related to postsecondary school (i.e., college), and excluded those for elementary or secondary school (K-12).

Under current federal law, 529 plan assets may be used, without tax or penalty, for certain pre-college (K-12) expenses—up to $10K per student per year.

However, many states have not yet conformed to the federal law, so please review your state’s laws before using 529 plan assets for K-12 expenses.

Current Developments

Under the current law, student debt is not considered a “qualified” education expense, so any investment gains used to pay student debt will be subject to taxes and penalties, but help may be on the way!

The Setting Every Community Up for Retirement Enhancement (SECURE) Act, if passed, may increase the utility of the 529 plan by allowing families to take tax-free 529 plan distributions for student loan repayment, homeschool expenses, and apprenticeship programs.

Please call us with any questions regarding 529 plans or if you’d like an objective review of your existing plan.

All the best,

Your Team at Gamble Jones

What is a “Roth conversion”?

What is a “Roth conversion”?

A “Roth conversion” is the action of converting pre-tax retirement assets (401(k), IRA, etc…) into Roth IRA assets. The converted assets are typically considered taxable income for the year of the conversion.

Why consider a conversion?

Your taxable income (and marginal tax bracket) is temporarily depressed, and you’d like to take advantage of the lower effective tax rate.

Tax rates may be higher in the future. 

  • Under the 2017 Tax Cuts and Jobs Act (TCJA), the highest Federal income tax rate is currently 37%. This is set to revert back to 39.6% January 1, 2026.
  • For high earners, the net investment income tax (NIIT), also known as the Medicare surtax, is currently 3.8%, and the income thresholds for this tax are not indexed for inflation.
  • Your Medicare insurance premium is based on your taxable income (including tax-free interest), which includes taxable distributions from your retirement accounts. Qualified Roth IRA distributions are not taxable and have no bearing on your Medicare premium costs.

You don’t want your beneficiaries to pay income taxes on the required minimum distributions (RMDs).

  • The SECURE Act, if passed, may require certain non-spouse beneficiaries to distribute 100% of an inherited IRA within a shorter time period (5-10 years) instead of over their lifetime.

What are other methods for funding a Roth IRA?

Like a Traditional IRA, you may make annual contributions as long as you have sufficient earned income (and don’t earn too much!). The maximum contribution for the 2019 tax year is $6,000 ($7,000 if you are turning 50 or older during the year).

If your adjusted gross income is too high, you won’t be able to fund a Roth IRA directly. The 2019 income phase-out levels follow:

  • Single Filer: $122,000 – $137,000
  • Married Filing Jointly: $193,000 – $203,000

The “Back Door” IRA conversion is an indirect method for funding a Roth IRA. This method requires funding a non-deductible IRA and converting these assets to a Roth IRA. The “pro-rata” rule may apply if you have other IRA assets so please review this method thoroughly with a tax professional before proceeding.

Please call us if you’re considering a Roth conversion or would like to discuss the merits of a conversion given your unique circumstances.

All the best,

Your Team at Gamble Jones

Gamble Jones Investment Counsel named to the CNBC Financial Advisor 100 list

It is with great pride that we announce that Gamble Jones Investment Counsel has been named to the CNBC FA 100 list.  The CNBC FA 100 celebrates the financial advisory firms that top the list when it comes to offering a comprehensive planning and financial service that helps clients navigate through their complex financial life. 

Gamble Jones ranked 12th on the list of the top 100 firms in the nation.  We want to take this opportunity to thank our clients for putting their trust in Gamble Jones for the last 63 years.  We at Gamble Jones will continue to strive to offer outstanding service to help our clients reach all of their financial goals.

To see the entire FA 100 list, please visit www.cnbc.com

Tax Efficient Gifting

Charitable donations aren’t made for the tax write-off, but if you’re going to donate, you might as well do it tax efficiently!  Gifting appreciated stocks and making qualified charitable distributions are two strategies to consider.

Gifting Appreciated Stocks

Instead of donating cash, consider gifting long-held appreciated stock. This will allow you to avoid the capital gains tax while still receiving the charitable deduction for the full value of the stock at the time of the gift.  

Rules to remember!

  • The stock position must have been held for a minimum of one year for you to receive the greatest benefit.   
  • In contrast, if the stock has been held for less than one year, the value of the gift will be equal to the cost basis instead of the value.
  • High-income donors may be subject to a partial phase-out of itemized deductions, but any excess can generally be carried forward and deducted over as many as five subsequent years.
  • Your custodian will require a detailed letter of instruction in order to transfer the shares, so give yourself ample time before year-end to execute the gift.

Qualified Charitable Distributions

For those over age 70 ½ with IRA assets, the IRS allows you to send funds directly from your IRA to a qualified charity. This action is called a Qualified Charitable Distribution (QCD) and…  

  • QCDs are not reported as taxable income on your tax return, so you don’t need to itemize your deductions to realize the benefits of the donation.
  • Even though the QCD would lower your itemized deductions, it could be more efficient to minimize your taxable income than maximize your itemized deductions.
  • QCDs lower your Modified Adjustable Gross Income (MAGI), which is used to determine your Medicare Part B premium. You may be able to save hundreds of dollars a year in Medicare premiums by lowering your Modified AGI.
  • QCDs count towards satisfying your required IRA distributions.

Rules to Remember!

  • QCDs may be made from Traditional, Inherited, and Rollover IRAs. SIMPLE and SEP IRAs are also eligible if the plans are inactive.
  • You must be 70½ or older to make a QCD.
  • QCDs only apply to IRA distributions that would be taxed as ordinary income (QCDs from non-deductible IRAs are not allowed).
  • The maximum annual QCD per tax payer is $100,000 (2019).
  • Funds that are distributed to you first from the IRA and then donated do not qualify as a QCD.
  • The receiving charity must be a 501(c)(3) and be eligible to accept tax-deductible contributions
  • Private foundations, supporting organizations, and Donor-Advised Funds are not eligible to accept QCDs.

As your tax situation is unique, please consult your tax adviser before gifting appreciated stock or performing a Qualified Charitable Distribution. As your financial adviser, we’re here to help guide you through this process.

All the best,

Your Team at Gamble Jones

Cyber Security Best Practices

It seems almost every other week we hear of a cyber security breach at a major corporation. With all the news surrounding these breaches, it is easy to become desensitized to the severity of what a cyber security breach might mean to you. Do not let your guard down; these crooks look for any opportunity that can benefit them at the expense of others. We at Gamble Jones feel that cyber security is so important to everyone that we wanted to arm you, our clients, with some easy do-it-yourself procedures that can help protect you from a cyber-crime.

By incorporating the following procedures, you will decrease the potential of a nefarious act against you:Keep your computer virus definition files current with the latest updates from your provider and run virus scans on your computer daily.

  • Apply all critical updates for your operating system on your home computer.
  • Change all important passwords a minimum of every 6 months; they should contain at least 12 characters, if not more, and incorporate capital and lowercase letters, numbers, and symbols. Do not use the same password for different sites.
  • If applicable, turn on dual factor authentication for any online service you use. Dual factor authentication can be security questions or even the site sending a text to your cell phone.
  • Make sure your financial institutions (broker, attorney, accountant, etc.) send confidential information via a secure client portal or through encrypted email.
  • Verify any money movement transactions with your financial institutions and double-check any money movement instructions by phone.

Gamble Jones takes your personal and confidential information very seriously. Here are some of the procedures we take to protect you:

  • We voice verify all third-party money movement. If you send us an email to move money to a third-party, expect a phone call from our client service team to verify your request. We will only contact you using the phone number we have for you in our system. If an email has a different contact number, we will not use it. If you have changed your phone number or address, please let us know.
  • We will only send personal and confidential information via the secure online portal or our encrypted email system.
  • We provide a secure document vault to our clients to store personal electronic copies of their trust, will, or any other document deemed necessary to protect. This vault protects our clients from disasters that could destroy the paper version and makes it easily accessible at any point in time.

Cyber security can be a scary topic, and Gamble Jones can only do so much to help protect you, our client. Implementing the procedures above is a great start to protecting your online profile. If you would like to take that protection to the next level, Lifelock and other identity theft protection services are great resources for monitoring and protecting your online profile. Through a partnership with our primary software firm, our clients may receive a 20% discount for life on LifeLock. If you decide to add their service, please call your Gamble Jones relationship manager to receive the discount code before calling LifeLock.

All of these items above can help you become more secure, and you will have greater peace of mind in knowing that your finances are protected. If you have any questions, please reach out to your relationship manager. We are here to help.

All the best,
Your Team at Gamble Jones