The majority of our clients are engaged in periodic portfolio reviews and retirement strategy update meetings. During these discussions, we review all of the necessary information required to develop the desired strategy for pursuing client goals. Clients are responsible for providing complete and accurate data and for choosing an Investment Objective for each account that will help them achieve their financial goals. An Investment Objective helps the Financial Advisor determine the investment allocation within each account. In an effort to capture powerful investment trends, investment allocations are built upon the guidelines of basic strategic boundaries while tilting towards the strongest asset classes at that given time in the investment cycle. If going through the recent market volatility has changed your desired Investment Objective, we encourage you to reach out to your Financial Advisor to further discuss and/or to consider making a change. With regard to your time horizon, please keep in mind that your finish line is not the date you retire. Your finish line is your life expectancy, which can be decades beyond your retirement date. Your assets will need to continue to grow during your retirement years in order to keep up with the rising cost of goods and services. Once we have successfully navigated the COVID-19 pandemic, we should have a wonderful opportunity to regroup and recalibrate your retirement plan. Hang in there…we are in this together!
The CARES (Coronavirus Aid, Relief, and Economic Security) Act was signed into law on March 27th, 2020 to help provide financial stability and relief for individuals and businesses affected by COVID-19. While there are many provisions to the Act, here are some of the provisions impacting IRAs and Retirement Plans in 2020:
- Temporary Waiver of Required Minimum Distribution (RMDs) Rules for Defined Contribution Plans, including 401(k), 403(b), 457, as well as IRAs
– Required minimum distributions (RMDs) rules are waived for 2020 distributions from IRAs, including Inherited IRAs and 2019 RMDs not taken in 2019 with a required beginning date of April 1st, 2020.
o An RMD that has already been taken in 2020 AND meets the following conditions may be rolled back into the IRA:
1. It was taken less than 60 days ago.
2. No IRA-to-IRA 60-day rollover contribution was completed in the last 365 days.
o Under current rules, a distribution taken from an Inherited IRA cannot be rolled back into the Inherited IRA or the individual’s own IRA.
o There may be additional relief for any distribution taken that does not meet these requirements.- Penalty Free Distributions from IRAs and Certain Retirement Plans
– Distributions to Qualified individuals from IRAs and retirement plans received during 2020 of up to $100,000 for COVID-19 are exempt from the 10% additional tax for early or pre-59 ½ distributions. These amounts are not subject to the 20% withholding requirements for qualified retirement plans. Qualified individuals include a COVID-19 diagnosis for an individual, their spouse or dependent, and financial hardship as a result of business closures, reduced work hours, lay off, furlough, lack of child care or other factors as determined by the Treasury Secretary.- Additional Provisions:
o Option to spread the taxable income over a three-year period.
o Repay any or all of the distribution to a retirement account over the next three years.
o Repayments not subject to retirement plan or IRA contribution limits.
Please click here
to read a New York Times article answering some of the frequently asked questions about the CARES Act.
We have seen substantial swings in the U.S. stock markets since the onset of the global COVID-19 pandemic and last week was no exception. According to Nasdaq Dorsey Wright, despite kicking off the week with a -3% down day, the Dow Jones Industrial Average (DJIA) experienced its best day on record since 1933, on Tuesday, March 23rd, when it finished the trading session with a double-digit gain of 11.37%. On Wednesday, the DJIA then managed to record a second consecutive day of gains, marking the first time this has happened since the index hit all-time highs in February. This positive movement continued Thursday, which not only marked the first consecutive three-day rally to occur within the past few months for the DJIA, but also allowed the index to log its strongest three-day stretch dating back to 1931, gaining over 20%. Recall that just a few weeks ago, the DJIA recorded its two worst days since the Black Monday crash of 1987, which came on March 12th and March 16th when the index notched single-day losses of -9.99% and -12.93%, respectively. Although we expect continued volatility, last week’s upward movement has caused a few of our technical indicators to react positively. While we have seen a few indicators adjust upward, many of the indicators we are watching have held steady over the past few weeks at historically washed out low levels. We are keeping a close eye on all of the indicators to help determine where the weight of the evidence lies.
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