As we mentioned in our last quarterly newsletter, Viewpoints, we are committed to keeping abreast of any changes that our custodians notify us about as we approach the end of the calendar year.  This year is no different, as Schwab and Fidelity have pushed out a few changes in the past several weeks.

First, let’s talk about Schwab.  They’ve sent out several updates recently, and they are as follows:

  • Georgia State Tax withholdings on IRA distributions

We’re providing this alert communication to make Firms aware of an important change in Georgia State tax withholding rules which may affect some clients’ retirement accounts. As a result of an internal review, it has been identified that Schwab’s backend tax withholding table does not align with the minimum tax requirement for Georgia. The state of Georgia has multiple rates which require a withholding of state taxes on taxable retirement distributions (Excludes Roth IRAs) at a minimum rate of 2-6% unless eligible participants elect to opt out of withholding. Clients with an annual income of over $15,000 are subject to a tax withholding at a rate of 6%. Schwab has decided to implement a minimum tax withholding election of 6%, finding it more appropriate since most clients annual income exceeds $15,000.

Beginning on October 4, 2018, Schwab will update the tax election to a mandatory minimum rate of 6% unless the client opts out or takes action to withhold taxes at a higher rate. Impacted clients will receive a letter or an email communicating the upcoming changes. If a client has one or more account(s) affected by this ruling, they will receive a letter or email communication for each account.

Clients’ next steps they’ll be informed of are:

  1. If the 6% minimum withholding rate is wanted, no further action is required on your part. Any distributions occurring after October 4, 2018 will have the 6% rate applied.
  2. If eligible and elect to Opt Out of withholding or elect a rate above 6%, to do so, please log into your account at and select “Tax Withholding” from the Service menu. If you do not have online account access, please contact Schwab Alliance.


  • Notices of changes to Schwab’s standard margin Base Rate

End clients with margin enabled accounts that are on standard rates will receive a rate change notification email letting them know that Schwab has changed the standard margin Base Rate. Effective September 28, 2018, the new Schwab margin Base Rate is 7.75%.

Schwab is also adjusting the spreads for balance tiers over $500K. This change will not impact the effective rates for standard rate loans above $500K.

  • Clients on a standard rate will automatically be moved to the new standard rate.
  • The margin rate will not change for clients on a negotiated rate.
  • Changes to Cash Features

We’re writing to let you know that Schwab is entering the final stages of our multiyear cash strategy to transition your client account cash features from sweep money funds to the FDIC-insured Bank Sweep feature.1

We embarked on this strategy back in 2014 with the objective of providing sustainable cash solutions to meet a wide range of client needs. Along the way we have made improvements to our cash solutions with the addition of enhanced FDIC coverage for the Bank Sweep feature and lowered account minimums and fees for our purchased money funds.

Fund and share class liquidation

On September 25, 2018, the Board of Trustees of The Charles Schwab Family of Funds approved that the fund/share classes noted below will be liquidated on or about April 10, 2019.

  •  Schwab Cash Reserves™ (SWSXX) 
  • Schwab AMT Tax-Free Money Fund™ – Sweep Share Class (SWFXX)* 
  • Schwab California Municipal Money Fund™ – Sweep Share Class (SWCXX)* 
  • Schwab Municipal Money Fund™ – Sweep Share Class (SWXXX)* 
  • Schwab New York Municipal Money Fund™ – Sweep Share Class (SWNXX)* 
  • Schwab Treasury Obligations Money Fund™ – Sweep Share Class (SNTXX)* 
  • Schwab U.S. Treasury Money Fund™ – Sweep Share Class (SWUXX)*

 Between January and April 2019, your clients’ shares in the fund/share classes noted above will be redeemed. The proceeds will then be automatically credited to their accounts and invested in the FDIC-insured Bank Sweep feature or another eligible cash feature.

The liquidation and change to your clients’ cash feature will take place automatically and no action is required by you.


Meanwhile, Fidelity has released their year-end deadlines for 2018.  You can read that HERE.

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It should be noted that most of these notifications don’t require action by you, our client, but at MONTAG we do keep abreast of any and all administrative changes from these custodians so as to continue servicing you and your accounts in the most efficient way possible.

Members of the MONTAG team discuss these administrative changes throughout the year, as they come up, and we are available to work closely with your attorney or tax planning professional (CPA) on matters where their expertise is needed as well.



    At MONTAG, we do things differently. We‘ve been a family-run business for nearly 40 years, and we still believe that our clients are best served by treating them as part of that family. We take the time to get to know you – what you’ve done to build your net worth, your investment philosophy, your financial questions and fears, and above all, your financial hopes. Every single client has their own unique story — a story that deserves more than a conversation with an anonymous voice. Contact our Business Development team today by calling 404.522.5774 or emailing [email protected] to get in touch. [email protected] MONTAG