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T
his Week from Jesse Hurst
Jesse W. Hurst, II
CFP® CERTIFIED FINANCIAL PLANNER™
AIF
® ACCREDITED INVESTMENT FIDUCIARY
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Did Congress Just Make Your Retirement More SECURE?
In mid-December, as part of a massive spending bill that was passed to avoid a government shutdown, a retirement savings bill known as the SECURE Act was passed by Congress and signed into law by President Trump on December 20th. The "Setting Every Community Up for Retirement Enhancement" Act was passed by the House of Representatives in May with a vote of 417-3, in a rare showing of bipartisanship. However, the bill had been stuck in limbo in the Senate since then.
There are a number of provisions within the bill, which was passed primarily to help small businesses provide more opportunity for retirement savings plans for their employees, that will impact the clients of Impel Wealth Management.
First and foremost, the act raises the required minimum distribution age, which had been 70 1/2 years old for more than 30 years, to age 72 starting in calendar year 2020. For our clients who turned 70 1/2 last year, they will need to continue taking their required minimum distributions going forward.
Secondly, in a very congress like way, the age for making Qualified Charitable Distributions from your IRA REMAINED at 70 1/2 years old. This is something we will need to pay attention to and we believe will likely cause confusion for many people going forward. It gives us the opportunity to make contributions to 501(c)(3), qualified charities with pretax dollars from your IRA one and a half years before you have to start taking your RMD's. This is especially important for our clients that can no longer itemize deductions under the new tax law.
In addition, Congress, in it's never ending search for additional tax revenue, did away with beneficiary or stretch IRA's. Clients will no longer be able to name their children as a contingent beneficiary of their retirement accounts AND have them take annual required minimum distribution's based on their child's life expectancy. This will be a major change for many of our clients who had expected that their children would be able to stretch the tax deferral and compounding of their retirement dollars for 30 years or more. Under the new rules, the child beneficiary will have 10 years to take out the remaining retirement plan dollars and pay the taxes.
The law contains many other provisions that we will be talking with you about in our future client meetings and financial planning reviews. These include:
- Eliminating the age limit for making contributions to IRA's, as long as you have earned income.
- Adding the ability to take a distribution from your IRA, up to $5000, for birth or adoption expenses without a 10% penalty.
This is probably the most significant piece of tax legislation related to retirement planning and our clients that we have seen in over a decade. We wanted to make sure you are aware of it as soon as possible. We know that the news and noise of the presidential election, the impeachment and geo-political issues sometimes drown out more pertinent issues that are applicable to you, our friends and clients. We will be discussing this with you in detail, at our future meetings. Our goal is to make sure that you understand how these significant changes will affect you and your family's financial goals as we continue "Moving Life Forward" together
Jesse
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Weekly Market Commentary
January 13, 2020
The Markets
It was a nerve-wracking week.
Iran fired 22 ballistic missiles at the Ain Al Asad air base near western Iraq and a second base in northern Iraq following last week's U.S. drone strike that killed a top Iranian military commander. Newsweek reported the bases suffered minimal damage and there were no casualties from the attack. However, Iran mistakenly downed a commercial airliner, killing all on board, reported CBS News.
U.S. stock prices faltered after the initial attack, but recovered quickly when both sides, "...step[ped] back from further violent escalation...," reported Barron's.
U.S. Treasury bond yields dropped sharply last week before rebounding. Financial Times reported the possibility of war caused global investors to seek out investments perceived to be safe havens. Record amounts of cash moved into bond investments, particularly U.S. Treasuries, during the week ended last Wednesday.
Australia was ravaged by wildfires. Citing the Insurance Council of Australia, NPR reported, "The wildfires have killed more than two dozen people, more than a billion animals. They've destroyed more than 1,800 houses, an untold number of commercial buildings and thousands of acres of prime farmland..." At the end of last week, 130 fires were burning and 50 were uncontained, according to the BBC. The damage could mark the end Australia's nearly 30-year economic expansion.
Puerto Rico was shaken by a 5.9 magnitude earthquake. The quake followed a magnitude 6.4 quake that hit the same region four days earlier, reported the Associated Press. Since December 28, the region has been hit by, "...more than 1,280 earthquakes, of which more than 100 were felt and more than 70 were of magnitude 3.5 or greater."
On Friday, a tepid U.S. employment report cooled U.S. stock returns. However, Barron's reported all three major U.S. indices closed, "within a half-percentage point of their highest-ever closes."
Data as of 1/10/20
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1-Week
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Y-T-D
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1-Year
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3-Year
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5-Year
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10-Year
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Standard & Poor's 500 (Domestic Stocks)
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0.9%
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1.1%
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25.8%
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12.9%
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10.0%
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11.0%
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Dow Jones Global ex-U.S.
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0.2
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0.5
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14.4
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6.7
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3.7
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2.4
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10-year Treasury Note (Yield Only)
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1.8
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NA
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2.7
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2.4
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1.9
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3.8
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Gold (per ounce)
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0.3
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2.0
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20.3
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9.3
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4.8
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3.0
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Bloomberg Commodity Index
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-0.8
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-0.2
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1.5
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-2.4
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-4.6
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-5.5
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S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
More milestones of the past decade.
As we mentioned last week, the period from 2010 through 2020 was filled with memorable events. We covered a few in last week's commentary. Here are some more:
- Gangnam Style. In 2012, Korean pop music went viral with Gangnam Style. Its online video became the first to be viewed one billion times.
- Total solar eclipse. For the first time since June 1918, a solar eclipse was visible across the entire United States in August 2017. We won't have to wait so long for the next one. Good Housekeeping reported it will happen in 2024.
- Economic confidence increased. In January 2010, Gallup reported just 9 percent of Americans said it was a good time to find a quality job. By the end of 2019, the number had increased to 66 percent.
- Bionic men, women, and children. Bionic people are no longer limited to the realm of science fiction. Prosthetics "...are morphing into mind-controlled extensions of the human body that let their wearers feel what they're touching," reported CNET.
- Trillion-dollar stock valuations. Late in the decade, three companies in the technology sector saw their stock valuations reach thirteen digits. Not all have remained at that level.
- Global middle class expansion. At the end of last year, about one-half of the world belonged to the middle class, according to the World Data Lab. Middle class means different things in different countries. Middle class income ranged from $3,872 a year to $38,720 a year.
- The U.S. wealth gap. The St. Louis Federal Reserve explained the gap like this: The 'income pie' in the United States grew from $7 trillion in 1989 to almost $12.9 trillion in 2016. The share of pie going to the top 10 percent of earners increased from 42 percent to 50 percent. Lower earners' shares shrank.
Weekly Focus - Think About It
"After many months of reflection and internal discussions, we have chosen to make a transition this year in starting to carve out a progressive new role within this institution. We intend to step back as 'senior' members of the Royal Family and work to become financially independent, while continuing to fully support Her Majesty The Queen. It is with your encouragement, particularly over the last few years, that we feel prepared to make this adjustment. We now plan to balance our time between the United Kingdom and North America, continuing to honor our duty to The Queen, the Commonwealth, and our patronages. This geographic balance will enable us to raise our son with an appreciation for the royal tradition into which he was born, while also providing our family with the space to focus on the next chapter, including the launch of our new charitable entity. We look forward to sharing the full details of this exciting next step in due course, as we continue to collaborate with Her Majesty The Queen, The Prince of Wales, The Duke of Cambridge, and all relevant parties. Until then, please accept our deepest thanks for your continued support."
--The Duke and Duchess of Sussex
Best regards,
Jesse Hurst CFP ®, AIF®
Investment Advisor Representative
P.S. Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.
Securities and advisory services offered through Cetera Advisors LLC, member FINRA/SIPC, a broker/dealer and a Registered Investment Adviser. Cetera is under separate ownership from any other named entity.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client's portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as "The Dow," is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
*To unsubscribe from the Impel Wealth Management please reply to this e-mail with "Unsubscribe" in the subject line, or write us at 2006 4th Street, Cuyahoga Falls, OH 44221.
Sources:
Securities and advisory services offered through Cetera Advisors LLC, member FINRA/SIPC, a broker/dealer and a Registered Investment Adviser. Cetera is under separate ownership from any other named entity. Confidential: This email and any files transmitted with it are confidential and are intended solely for the use of the individual or entity to whom this email is addressed. If you are not one of the named recipient(s) or otherwise have reason to believe that you have received this message in error, please notify the sender and delete this message immediately from your computer. Any other use, retention, dissemination, forward, printing, or copying of this message is strictly prohibited.
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Is there something we can help you with? Please call me at 330.800.0182 or email me directly at [email protected].
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Impel Wealth Management
2006 4th Street, Cuyahoga Falls, OH 44221
P: 330.800.0182 TF: 844.422.5550 F: 234.312.0460
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