The Document Your Will Doesn't Control

A six-figure retirement plan distribution showed up at Davidson College one day when I was working there in planned giving. Totally unexpected. The donor hadn't updated his beneficiary forms in decades, his primary beneficiary had died, and the college was listed as the contingent. We were thrilled—though we found ourselves hoping this matched his final wishes. Was this what he actually wanted? We'll never know.

Which brings me to the least exciting topic I can possibly lead a newsletter with: beneficiary designations. Stick with me.

There's something about January that makes us want to organize things. Gym memberships spike. Self-help books and podcasts see a surge in sales. But some disarray is less obvious. You guessed it. I'm talking about outdated estate documents and beneficiary forms.

How are you doing on your resolutions? Is that Duo Lingo streak still going? How about your financial housekeeping? Can we help you review your beneficiary designations?

The 2026 Numbers You Need to Know

Every year the IRS adjusts contribution limits to account for inflation. Here are the numbers that matter for your 2026 planning:

Retirement Contributions:

• 401(k)/403(b)/457(b): $24,500 (up from $23,500)
• IRA (Traditional and Roth): $7,500 (up from $7,000)
• Catch-up contributions (age 50+): $8,000 for 401(k)s, $1,100 for IRAs
• "Super catch-up" (ages 60-63): $11,250 for 401(k)-style plans

Important New Rule for High Earners: Starting in 2026, catch-up contributions to workplace retirement plans (401k, 403b, etc.) must be made as Roth (after-tax) contributions if you earned over $150,000 in 2025. This only affects workers age 50+ making catch-up contributions to workplace plans—IRA rules are unchanged. Check with your HR department to ensure your plan offers Roth catch-up options.

Qualified Charitable Distributions (QCDs):

• $111,000 per person (up from $108,000)
• Available to those 70½ or older
• Can satisfy Required Minimum Distributions without increasing taxable income

Annual Gift Tax Exclusion:

• $19,000 per recipient (unchanged from 2025)
• Married couples can gift up to $38,000 per recipient
• Unlimited gifts for tuition (paid directly to institution) and medical expenses (paid directly to provider)
• Lifetime estate and gift tax exemption: $15 million per individual ($30 million for couples)

Knowing these numbers helps you take full advantage of what the tax code allows in 2026.

The Document Your Will Doesn't Control

Most people think their will controls where all of their assets go when they die. 

Beneficiary designations operate outside of your will. Always. Your 401(k), IRA, life insurance policy, and any account with a "payable on death" or "transfer on death" designation will go exactly where those forms say—regardless of what your will says, regardless of what you intended, regardless of what seems fair or logical.

This creates some predictable problems:

The ex-spouse problem. Divorce happens. Wills get updated. But that 401(k) from the first job? Still lists the ex. They’ll receive it. The current family gets nothing from that account.

The dead beneficiary problem. Someone named their sister as beneficiary 20 years ago. Sister passed away five years ago. Form never got updated. Now that asset goes to the estate, goes through probate, gets delayed for months, and heirs pay unnecessary legal fees.

The minor (underage) child problem. Parents name kids as direct beneficiaries when they're young. If something happens before the kids turn 18, they can't legally inherit. A court appoints a guardian to manage the money, adding complexity and cost nobody intended.

The taxation problem. Under current rules, non-spouse beneficiaries must withdraw all funds from an inherited IRA within 10 years—and every dollar withdrawn counts as ordinary income. If your children are in their peak earning years when they inherit, they could be paying taxes at their highest marginal rate on forced distributions. Meanwhile, charities pay no tax on IRA distributions. Consider naming charities as IRA beneficiaries and leaving tax-efficient assets (like appreciated stock or Roth accounts) to your family members. This strategy maximizes what your heirs actually receive while still supporting causes you care about.

The fix is straightforward but requires action: review every beneficiary designation you have. Pull out the actual forms. If we manage the accounts, we can tell you how it’s set up. Don't rely on memory or assumptions about what you think you did years ago.

Accounts to check:

• 401(k), 403(b), and other employer retirement plans
• Traditional and Roth IRAs
• Life insurance policies (both term and permanent)
• Annuities
• Bank accounts with payable-on-death (POD) designations
• Brokerage accounts with transfer-on-death (TOD) designations
• Health Savings Accounts (HSAs)
• Donor Advised Funds

When to review:

• Marriage or divorce
• Birth or adoption of a child
• Death of a beneficiary
• Significant change in financial situation
• Change in relationship with named beneficiaries
• At minimum, every 3-5 years

What to look for:

• Are the primary beneficiaries still the right people?
• Have you named contingent (backup) beneficiaries?
• Are any beneficiaries deceased?
• Do the designations align with your overall estate plan?
• For retirement accounts: have you considered the tax implications for your beneficiaries?

Earnings Season Delivers Mixed Messages

Markets started 2026 hovering near record highs—the S&P 500 touched 7,000 briefly before pulling back. As of this morning (Thursday, January 30), the major indices are treading water after a volatile earnings week.

Apple reported Wednesday afternoon with staggering numbers: $143.8 billion in revenue (up 16% year-over-year), driven by what CEO Tim Cook called "unprecedented" iPhone demand. China sales surged 38%. The stock initially popped but gave back gains this morning after Cook warned about memory chip supply constraints affecting margins.

Microsoft wasn't as lucky—shares dropped 11% Thursday after reporting slowing cloud growth despite record-high AI spending. The market is clearly differentiating between AI winners and losers now.

But here's what's interesting: AI isn't just a tech story anymore. Caterpillar reported a strong quarter and jumped over 4%, driven in part by how they're using AI to optimize equipment maintenance and improve operational efficiency for their customers. The AI boom is creating ripple effects beyond Silicon Valley—from construction equipment to data center buildouts to the chips that power it all.

The broader story? After years of the "Magnificent 7" dominating returns, we're seeing healthier market participation. Energy, healthcare, utilities, and industrials like Caterpillar posted strong late-2025 performance. The equal-weight S&P 500 (which treats every stock the same regardless of size) is up over 4% this year, while the market-cap weighted index is barely positive. That's a good sign—less concentration risk means less vulnerability if any single sector stumbles.

Meanwhile, Trump announced Kevin Warsh as his pick for Fed Chair, viewed as more hawkish than other contenders. Markets don't love uncertainty around Fed leadership, but rate expectations haven't shifted dramatically—futures still price in limited, gradual cuts through 2026.

Markets are also digesting uncertainty around trade policy and a weakening dollar, though neither has derailed the broader earnings narrative so far.

The bottom line: Corporate earnings matter more than ever right now. The AI spending boom has to start translating into actual profit growth, and investors are scrutinizing every quarterly report. If you're feeling antsy about portfolio positioning heading into earnings season, that's normal. It's also not actionable—which brings us back to the January cleaning checklist.

Your Financial Housekeeping Checklist

If you're in the mood to organize and clean up, here are the financial tasks that actually matter:

Review your beneficiary designations. Set aside an hour to pull every form and verify it reflects your current wishes. This is the single most important item on this list. I know what you're thinking: "I'm pretty sure I updated those forms." Great! When? Where are they? Can you put your hands on them right now? If the answer is "probably 2015-ish" and "no idea," make this your top priority.

Adjust your contribution rates. With the 2026 limits increasing, bump your 401(k) contribution by even 1%. With annual raises, you likely won't feel the difference, but your future self will.

Update your emergency fund target. Inflation has changed what "3-6 months of expenses" means. Recalculate based on your current spending and adjust your target accordingly.

Check your insurance coverage. Life changes, home values change, and so do your insurance needs. When was the last time you actually reviewed your policies rather than just auto-renewing them?

Clean up old accounts. That 401(k) from your job three companies ago? Roll it into an IRA. That savings account with $47 in it? Close it. Fewer accounts means less to track and fewer beneficiary forms to maintain.

Schedule your review. If we don't have something on the calendar for this year, let's fix that now. Regular check-ins prevent small issues from becoming big problems. Plus, we can help you with all of the above.

Three Questions Worth Asking Yourself

Rather than a long list of financial resolutions that won't survive to Groundhog Day, here are three specific questions:

1. Am I maximizing the free money? If your employer offers a 401(k) match and you're not contributing enough to get the full match, you're turning down guaranteed returns. With the 2026 limits increasing, consider bumping your contribution up to capture more of that match.

2. Am I spending from the right accounts in retirement? The sequence matters for taxes. If you're not sure whether you should be drawing from your IRA, your taxable account, or your Roth first, that's worth a conversation.



3. What's one financial behavior I want to systematize this year? Not improve, not try harder at—but build into automatic systems. Maybe it's a quarterly calendar reminder to review spending. Maybe it's automatic annual IRA contributions on January 15th. Maybe it's a standing appointment with your financial advisor every six months. The behaviors that become automatic are the ones that actually stick.

The organizing impulse that comes with a new year is real, and it's worth harnessing. But while you're cleaning out your closets and organizing your garage, don't forget about the financial clutter that can actually cause problems for the people you care about.

Good financial planning isn't about brilliant market calls or perfectly timed decisions. It's about getting the boring administrative stuff right so that when life happens—and it always does—your family isn't left trying to untangle a mess while simultaneously grieving and Googling "what is probate."

If you'd like help working through your financial cleaning checklist or just want to do a general check-in on where things stand, please reach out. Sometimes an outside perspective catches things that are easy to miss when you're in the middle of it.

As always, thank you for the privilege of serving as your financial guide.

Thank you for reading. If you liked this content, please share with a friend. You can always reach us by replying to this email or at 704-323-6872.

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