Quote of the Week
“Character is higher than intellect. A great soul will be strong to live, as well as strong to think.”
– Ralph Waldo Emerson
Technical Corner
As I have stated in the past few months, we have engaged Omega 2 an asset manager that will be managing the portfolios starting at the beginning of this year. We are currently all cash in a Fidelity U.S. Government Money Market that is paying over 3% as nothing is attractive enough to invest in at this moment.
So far this year we have had a nice little Bear Market Rally. The technicals are showing that we are pushing up against the upper range of the rally.
I can continue as I have done for the past few months to quote all the data pointing to a continued Bear Market but let’s just say that things are getting worse and not better. We are headed into negative corporate earnings reports for the fourth quarter of last year.
Corporate earnings for the first quarter of this year will be even worse as salaries rise and demand declines. We also expect a negative GDP for the first quarter of this year. Based on the direction and the strength of this trend we don’t see rebound of the equity markets for a lengthy period.
Lisa’s Thoughts
Just when we think the SECURE ACT is complete, Congress creates version 2.0. It’s packed with lots of little updates that affect so many of our clients. Be prepared for us to touch on this topic for months to come. The major changes we can expect affect IRA contribution limits, 529 Plans and of course required minimum distributions.
The new contribution limit for has been increased to $6,500 from $6,000 (2022) and the $1,000 catch up contribution still applies for those of us over age 50. The phaseout ranges have also increased for tax filers that are covered by a company plan. Remember that you can make your 2022 IRA or Roth IRA contribution up until the tax filing date.
More good news for those of you turning 72 this year (2023) . You can put off your RMD until 2024 as the new required beginning age to start taking those mandatory withdrawals from your IRA is 73. This age will increase to 75, but not until January 1, 2033. Frankly, I’m not sure why Congress is making plans 10 years in advance.
I’ve saved the most exciting news for last. Effective in 2024, beneficiaries of 529 college savings plans are permitted to roll over up to $35,000 aggregate over the course of their lifetime from a 529 account in their name to a Roth IRA. The rollover is subject to annual Roth IRA contribution limits, so reaching that $35,000 limit will take a few years. The 529 account must have been open for at least 15 years. This new rule will allow recipients to avoid the penalty or tax for remaining 529 balances, while potentially funding their tax-free retirement right out of college!
Stay tuned for more updates coming in the next few weeks.
