Home

Mitlin Financial Welcomes Jorrell Bland to the Team

 Bland Jorrell ProfessionalPhoto Web

Mitlin Financial, Inc. is pleased to announce that Jorrell R. Bland has joined us as the newest member of our team.
 
Jorrell comes to us with over four years of experience in the financial services industry with New York Life.  Jorrell will be responsible for servicing clients of the firm and making sure they are "WOW'd".  He is committed to providing our clients, and all those that interact with our firm, a high level of service.
 
Please join me in welcoming Jorrell to Mitlin Financial and feel free to contact him at (631) 952-4466 x13 or via email at This email address is being protected from spambots. You need JavaScript enabled to view it..  Jorrell looks forward to speaking with you and meeting you in the near future.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Zero Commissions, Does Not Mean “Free”

 

zero

 

Recently several brokerage firms, including our primary custodian TD Ameritrade, have announced they are moving to zero commissions on online trades involving equities, exchange-traded funds (ETF’s) and options. This move is a result of pressure from investment firms like Robinhood who have made this move in recent years.

At first glance, this seems like a win for the investor and it is to a degree. This will eliminate a nuisance fee of, around, $10 to place orders to buy and sell these securities. Let’s be real though, in some instances these little fees added up to a hundred million or more of revenue for some of these firms. Do we really believe that they are simply going to let go of this revenue without trying to recapture it somewhere else? I surely do not!

The brokerage firms are going to be hard-pressed to replace the lost revenue in other places. I believe this may lead them to recover the revenue through less transparent methods. When you were paying $6.99 a trade (or whatever your brokerage was charging) you knew the inherent cost of the trade or at least thought you did. In many instances, although you were paying $6.99 per trade the brokerage firms were deriving additional revenue from these trades in other places. The $6.99 was clear and transparent, while the other costs were not.

Zero commissions, I believe, will not mean zero cost to the client. Just as $6.99 did not necessarily mean that was the total cost. There are several ways these firms will be able to ascertain revenue, such as widening the bid/ask on securities, selling their order flow and requiring certain cash balances in client accounts.

The first two methods cited above, widening the bid/ask and selling order flow, are techniques used by the brokerages to add revenue through trading. These are methods used by the brokerage firms and custodians in order to increase their revenues generated based upon the sheer volume of orders that they are placing on an ongoing basis. The client is typically getting a fair price but it enables the firms to generate more revenue at the same time. In a perfect world, the client would pay nothing for the trade and potentially receive a better price for the transaction. As we know, nothing in life is free.

We also may see the brokerage firms start requiring clients to maintain a certain amount in cash balances to receive “free” trading. Cash balances have a tendency to be a huge source of revenue for firms. These balances are currently receiving a paltry amount of interest and the brokerages are able to lend out funds, based upon these balances, at much higher rates. The revenue generated to them is the difference between what they are paying the client and what they are receiving in interest. In many cases, this could be several percentage points of interest. Should firms require a certain amount of cash balances be maintained in an account for “free” trading, is it really free then? In my view you are simply underwriting your own trading by maintaining the balances they require with the revenue being generated.

The takeaway here should be, “free” is not free, there is typically a cost somewhere. It is important that you work with a fiduciary advisor that will review, share and discuss these potential issues with you and disclose those conflicts of interest too. Be sure to contact us, Mitlin Financial, at (844) 4-MITLIN x12 to schedule a time if you would like to discuss “free” trading further and how it might affect you and your portfolio.

Be sure to share this article with friends, family and business acquaintances who might be interested too. We look forward to helping you, and them, get on the right path and stay there.

 

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Congress Set To Pass SECURE Act

 CapitalBuilding

The SECURE Act, Setting Every Community Up for Retirement Enhancement Act, has been in the news for many months now. Since the House passed this earlier in the summer there has not been much heard about it until recently. This piece of legislation has been attached to the spending bill that Congress is looking to pass before they break for the holiday. The House has already passed it and it is on to the Senate.

This is a complex act with many working parts. We will cover some of the highlights that will affect the largest majority of people.

We see one of the most sweeping changes in the way beneficiary IRA’s will be handled. The SECURE Act will eliminate the ability of the beneficiary (unless they are a spouse or fill another exception) to stretch the payments from the IRA over their lifetime, the well-known stretch IRA. Instead, beneficiaries will be forced to withdraw all the assets from the beneficiary IRA no later than 10 years after the account owner passes away. This will have significant impacts on the tax status, especially those in high brackets and their prime working years, of the beneficiary and could have other adverse consequences as a result too. This provision will have the potential for a negative impact over time.

The act does contain some provisions that will be helpful. Those who have IRA assets will not be required to take RMD’s (required minimum distributions) until the age of 72. This will only apply to those that have not attained age 70 ½ before the end of 2019. In addition, those who are working past the age of 70 ½ who currently cannot make IRA contributions will be able too.

The SECURE Act is being touted as the most sweeping piece of legislation in the retirement area since the passage of the Pension Protection Act of 2006. There are additional aspects of the act that will affect retirement plans which will potentially provide access to more people to save. In addition, the insurance industry has been a big proponent of this legislation because it will provide the ability for insurance products, specifically annuities, to be purchased inside of 401(k) plans. This is a big win for the insurance company, but I am not sure it is equally as beneficial for the general public looking to save.

The SECURE Act contains 29 new provisions and changes, far too many to cover in a blog post, but I believe we have covered the most important ones. It is going to be more important than ever in 2020 to make sure that you are working with a fiduciary advisor, who is working in your best interest, who understands how this act is going to affect you. There may be additional planning needed from an estate planning perspective if your current assets include a large retirement plan and/or IRA assets.

It looks highly likely that this legislation will pass later this week and you will want to make sure you know how this is going to affect you in 2020 and going forward. We will be addressing this with each of our clients in their upcoming meetings and suggest you make sure you are reviewing it too. Be sure to contact us, Mitlin Financial, at (844) 4-MITLIN x12 to schedule a time if you would like to discuss the SECURE Act and what effect it could have on your family’s financial situation.

Be sure to share this article with friends, family and business acquaintances who might be interested too. We look forward to helping you, and them, get on the right path and stay there. 

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Payment Apps, Should I Use Them?

Payment Apps Should I Use Them

 

Technology has provided us with many tools that make our lives easier on a daily basis. The question is, does easier mean better? The answer to this question will depend largely upon how you use the technology. I am going to focus here on the technology of payment apps.

The days of carrying around cash and even credit cards are starting to wane. It used to be a must to make sure you had both with you at all times. Now with technology like Apple Pay, Venmo and Paypal, it is less necessary. At times, when I was a kid, it used to take time to get reimbursed from friends or family if you needed to help them out and pay an expense for them if they forgot their cash or credit cards. With the apps mentioned above, you can literally pay people back in seconds, assuming you have the money in your bank account or credit available on a credit card.

Convenience like this certainly can make our lives better, but there are unintended consequences that come along with these technologies. They allow you to spend money that you may not have necessarily budgeted for that month. When you used to have to go to the bank to take out money for expenditures and actually hand the money to someone else for an expense it gave you a true sense that this money was being spent. Now, with a few clicks, the money is transported from your account to your friend or a vendor. This does not provide you with the same feeling of incurring the expense.

I am not saying that you should not use these modern-day payment options, as I use them all the time, but for your financial wellbeing, it is important that you understand and do not lose sight of what you are spending when using these tools. They are designed for convenience and for those looking to capture your dollars more easily. Whether you write a check, pay cash, use a credit card or use a payment app it is important that you have a clear understanding that this is an expense and must be considered as part of your monthly budget.

Do not allow these modern day conveniences to derail your financial plan or budget. There are tools out there that can help you monitor your budget and will take these types of payments into account. Technology is excellent, as long as it is used as a tool to help us in our everyday lives. Be aware that they can also have a detrimental effect too.

Budgeting is an important part of any financial plan. We would be more than happy to discuss with you tools that may help you track, maintain and stay on course to build your financial future. Please feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 and be sure to share this article. Let friends, family and business acquaintances that we are here to help them too. We look forward to helping you, and them, work on getting financially fit.

 

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

2020 IRS Limits Affecting Qualified Plans and IRA’s

IRS Limit Changes

Do you have a retirement or pension plan established for your company? Are you part of your employer’s retirement plan? Do you contribute to an IRA? Do you pay into the social security system? Chances are unless you are retired, you answered yes to at least one of these questions and you will want to know about changes taking place in 2020.

On an annual basis the IRS will review changes in the Consumer Price Index and make adjustments to the amount that can be contributed to qualified plans, individual retirement accounts, the income limitations for contributing, as well as social security taxable wage base.

On November 6, 2019, the Internal Revenue Service announced cost-of-living adjustments, based on changes to the Consumer Price Index (CPI), affecting dollar limitations for pension plans and other retirement-related items for the 2020 tax year. Many of the pension plan limits are increasing for the 2020 plan year due to Consumer Price Index (CPI) increases.

We are providing you with an overview of the updates to the 2020 IRS limits and how they will change from 2019. You can find a complete overview of the changes by visiting the IRS Notice 2019-59.

 2020 IRS Limits Affecting Qualified Plans & IRA's

PLAN LIMITS

2020

2019

Traditional/Roth IRA Limit

$6000

$6,000

Traditional/Roth IRA Catch-Up Contribution Limit

$1,000

$1,000

SIMPLE Maximum Annual Elective Deferral Limit

$13,500

$13,000

SIMPLE 401(k) or SIMPLE IRA Catch-Up Contribution Limit

$3,000

$3,000

401(k)/403(b) Elective Deferral Limit

$19,500

$19,000

401(k)/403(b)/Catch-up Limit

$6,500

$6,000

Defined Benefit Plan Dollar Limit

$230,000

$225,000

Defined Contribution Plan Limit

$57,000

$56,000

Annual Compensation Limit

$285,000

$280,000

Highly-Compensated Employee Limit

 

$130,000

 

 

$125,000

 

Key Employee Officer Limit

$185,000

$180,000

Social Security Taxable Wage Base

$137,700

$132,900

 

We have some key takeaways that should be reviewed. You may benefit by increasing your contributions for 2020.

  • The Traditional and Roth IRA deferral limits will remain the same at $6,000. 
  • There were no changes to the catch-up contributions for IRA’s, it remains at $1,000.
  • The 401(k) elective deferral limit was raised to $19,500. Be sure, if your intention is to max out, that you have the correct deferral percentage elected.
  • Keep in mind that catch-up contribution limits for employees 50 and over who participate in 401(k), 403(b), most 457 plans and the federal governments Thrift Savings Plan has also changed to $6500
  • The SIMPLE maximum has been increased from $13,000 to $13,500.
  • Catch-up contribution limits for employees 50 and over who participate in a SIMPLE 401(k) or SIMPLE IRA remains unchanged at $3,000.
  • Those that maintain or participate in a Defined Contribution or Defined Benefit plan will want to be familiar with the new dollar, plan, annual compensation, highly compensated employee and key employee limits.
  • The social security wage base has been increased from $132,900 to $137,700. People who earn more than $132,900 will be contributing more to social security than they have in the past. Those beneath that threshold will not see any change in the coming year.

Be sure to discuss these changes with your financial professional and CPA. You may need to make some adjustments to your deferral strategy based upon the new limits released for 2020. It is important to make sure, especially if your intentions are to maximize your contributions, that you are contributing what you need to on an ongoing basis in order to max out your allowable contributions.

We would be happy to answer any questions you may have regarding these changes and how they may impact you. In addition, we would be happy to discuss the benefits of implementing a retirement plan for your business or a retirement account for you personally. Feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone you know needs assistance in this area.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

More Articles ...