Keeping Your New Year’s Resolutions in 2020

Contributed by: Robert Ingram, CFP®

Set a goal to keep your goals. With the start of January, it’s that time of year again.  You’ve likely made one or more New Year’s resolutions whether it’s getting back to the gym, improving your financial life, or spending more time with family.

But sometimes the goals we set can be hard to commit to. We begin with the best intentions and later find that we’ve broken our resolutions within the first few months.  In fact, a U.S. News & World Report survey says as many as 80% of resolutions fail by the middle of February.

So, how can we be part of the 20% who succeed?  

Try these ideas:

• Keep your goals focused: You may have several things you wish to accomplish in 2020, but begin with no more than 3 goals.  Juggling too many can make it difficult to stay organized. Your energy and attention can only stretch so far. Focusing on fewer goals helps you prioritize what you value the most.

• Be specific: Saying “I want to lose weight” or “I want to save more for retirement” may be well-intentioned, but it’s not specific enough to wrap your mind around.  Instead, define your goals further by saying “lose 10 pounds over the next the 3 months” or “save an additional 5% of your income in your 401(k)”.

• Make them actionable and measurable: Now that your goals are specific, it’s time to make a plan.  If your goal is to lose weight, plan on going to the gym. Write down what days you’ll go and what exercises you’ll do. This allows you to quickly assess your progress and figure out what adjustments are necessary.

• Shorten the timeframe: Don’t risk losing motivation. Break down quarterly and monthly goals. Making progress more frequently makes goals more manageable, even if the wins are smaller. If your goal is to save money, look at your spending habits by the week or even the day. 

• Be accountable to a third party: Have someone hold you accountable or even motivate you. A family member, friend, colleague, or mentor could help. If your goals are financial, of course your planner can be your accountability partner…helping you establish goals and developing actionable steps.

Like any good plan, the best way to achieve success is to put it in writing, take action, and improve along the way. Wishing you a healthy and prosperous New Year!

Robert Ingram, CFP®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® With more than 15 years of industry experience, he is a trusted source for local media outlets and frequent contributor to The Center’s “Money Centered” blog.

New Year Financial To-Dos!

Contributed by: Kali Hassinger, CFP®

There's no better time than a fresh decade to begin making plans and adjustments for your future. Although we may think of the New Year as a time for "resolutions," it's important to focus on actionable and attainable goals, too. Instead of setting a lofty resolution without a game plan in mind, might I suggest that you consider our New Year Financial checklist below? If you get through this list, not only will you avoid the disappointment of another forgotten resolution in February, you'll feel the satisfaction of actually accomplishing something really important!

• Review your net worth as compared to one year ago, or calculate your net worth for the first time! Regardless of how markets perform, it's important to evaluate your net worth annually.  Did your savings increase or should you set a new goal for this year? If you find that you’re down from last year, was spending a factor?  There’s no better way to evaluate than by taking a look at the numbers!

• Speaking of spending and numbers, review your cash flow!  How much came in last year and how much went out?  Ideally, we want more coming in than is going out!

• Now, let's focus on the dreaded budget, but instead we’ll call it a spending plan.  Do you have any significant expenses coming up this year?  Be prepared by saving enough for unexpected costs. 

• Be sure to review and update beneficiaries on IRAs, 401(k)s, 403(b)s, life insurance, etc.  You'd be surprised at how many people don't have beneficiaries listed on retirement accounts. Some even forgot to remove their ex-spouse!

• Revisit your portfolio's asset allocation. Make sure your portfolio investments and risks are still aligned with your life, goals, and comfort level. I'm not at all suggesting that you make changes based on market headlines, but you want to be sure that the retirement or investment account you opened 20 years ago is still working for you.

• Review your Social Security Statement. If you're not yet retired, you will need to go online to review your estimated benefit. Social Security is one of the most critical pieces of your retirement, so be sure your income record is accurate.

Of course, this list isn't exhaustive. Reviewing your financial wellbeing is an in-depth process, which is why the final step is to set up a review with your advisor. Even if you don't work with a financial planner, at a minimum set aside time on your own, with your spouse, or a trusted friend to plan on improving your financial health (even if you only get to the gym the first few weeks of January).

Kali Hassinger, CFP®, CDFA®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She has more than a decade of financial planning and insurance industry experience.

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Any opinions are those of the author and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.

Are you Owed Back Child Support? A QDRO Could be the Solution

Contributed by: Jacki Roessler, CDFA®

In May of 2019, Michigan’s Attorney General, Dana Nessel announced the collection of more than $275 million in child support owed since the 2003 formation of the Attorney General’s Child Support Unit (www.michigan.gov). Of course, back child support is a problem in every state, not just Michigan. In fact, this socio-economic problem severely penalizes the children whose custodial parent is dependent on child support to pay their monthly bills.

A little known recourse to collect back support is with a Qualified Domestic Relations Order (QDRO, for short).

A QDRO is a legal document that assigns money from an employee’s qualified retirement plan (401k-type plan or pension), pursuant to a divorce or domestic relations matter. Payments pursuant to a QDRO can be for the purpose of child support, alimony, or property division. Further, the recipient (“Alternate Payee”) of a QDRO may be a spouse, former spouse, child, or dependent of the employee (“Participant”). (ERISA §206(d)(3)(B)(i); IRC §414(p)(1)(A)).

Let us consider the hypothetical case of Jenny and Mike, who were divorced 10 years ago and have two minor children. Pursuant to their divorce, a court order required Mike to pay Sandy $1,500 per month in child support. Four years ago, Mike retired from his job with General Motors and moved to Florida. He currently owes Jenny $72,000 in back support, plus interest.

Jenny was fairly certain that Mike was receiving pension benefits through General Motors. She and her attorney hired an expert to prepare a QDRO awarding her a monthly sum for a period of 36 months, until the arrearage was paid off. The QDRO was quickly approved, and Jenny immediately began receiving payments directly from the pension plan. It’s important to note that the payments were treated as taxable income to Mike, not Jenny, as child support is not taxable income to the recipient.

In another case, Jill owed her ex-husband, Bob, $15,000 in back child support. Jill wasn’t retired or receiving a pension, but she did have a 401(k) with her employer. Bob’s attorney hired an expert to draft a QDRO on Jill’s 401k, which awarded him a lump sum of $18,750. This sum represented the amount owed ($15,000), grossed up for the 20% in taxes the plan would be required to send to the IRS. Again, the tax liability would be the responsibility of Jill, not Bob, because the QDRO was for the purpose of child support.

A few important things to note:

One, back child support doesn’t ever “go away”. A QDRO can always be used today for an arrearage built up in the past. Second, there is no limit on how many QDROs can be prepared assigning money to an Alternate Payee on a single qualified retirement plan. Further, a QDRO can assign up to 100% of the entire account balance or monthly pension benefit. Last, QDROs only apply to qualified plans; they aren’t applicable to IRA or non-Qualified Annuities.

Jacki Roessler, CDFA®, is a Divorce Planner at Center for Financial Planning, Inc.® and Branch Associate, Raymond James Financial Services. With more than 25 years of experience in the field, she is a recognized leader in the area of Divorce Financial Planning.

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Any opinions are those of Jacqueline Roessler, CDFA®, Branch Associate for Raymond James Financial Services, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

This case study is for illustrative purposes only. Individual cases will vary. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.

Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

The new SECURE Act brings changes to your retirement accounts

Contributed by: Kali Hassinger, CFP®

The Senate recently passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act, a change in legislation significant to most Americans who are preparing for or in retirement. Some provisions, however, also have implications for those set to inherit retirement accounts.

While the new SECURE Act expands the amount of time employees and retirees can continue saving (and deferring taxes) within their retirement plan accounts, the bill changes the required distribution rules for non-spouse beneficiaries of retirement plans such as 401(k)s, 403(b)s, Traditional IRAs, and Roth IRAs.

The Maximum age for traditional IRA contributions

The SECURE Act removes the age cap, currently age 70 ½, for Traditional IRA contributions. This change would allow older workers to save a portion of their earned income into a Traditional IRA, just as they currently do within a Roth IRA. (The Roth has never carried an age cap for contributions.) For those age 50 and older in 2019, the maximum contribution is $7,000. Keep in mind, this means that an older worker who has enough income to cover the total IRA contribution could also contribute to an IRA for a retired spouse.

401(k)s & Annuities

The SECURE Act would allow more 401k plans to offer annuities that provide guaranteed, lifetime income for clients in retirement. In the past, employers have been concerned to offer such annuities, due to the fear of being sued for breach of fiduciary duties if the annuity provider faces future financial problems. To address this issue, the SECURE Act would create a safe harbor that employers can use when choosing a group annuity. The Act would also increase the portability of annuity investments by letting employees who take another job or retire to move their annuity to another 401k plan or to an IRA without incurring surrender charges and fees.

Required Minimum Distribution changes

This new bill also brings a significant change to Required Minimum Distributions, which refers to the age at which distributions from retirement accounts must begin. The age has been raised from 70 ½ to 72 years old. This allows an extra 18 months of tax-deferred growth for account holders who don’t have an immediate need to tap into their retirement accounts. These changes come into effect on December 31, 2019, so anyone who is 70 ½ before that time will be grandfathered in under the old laws. The rules surrounding Qualified Charitable Distributions, however, will remain the same. Those ages 70 ½ and older can still give tax-free donations to charities, if the funds are directly moved from the IRA to the charity.

Non-Spouse Beneficiaries of IRAs

The new legislation significantly changes how non-spouse account beneficiaries must distribute assets from inherited retirement accounts. The new law mandates that beneficiaries withdraw the balance of the inherited account within 10 years from the year of death. This removes the beneficiary’s option to spread out (or stretch) the distributions based on life expectancy. As a result, many beneficiaries will have to take much larger distributions, on average, in order to distribute their accounts within a shorter time.

The Secure Act also includes some additional changes:

• A provision that allows up to a $5,000 penalty free retirement plan withdrawal within a year of birth or adoption of a child ($5,000/parent, so $10,000 total for a married couple).

• Increased access to multiple employer retirement plans for unrelated small employers.

• Access to 401(k)s and retirement plans for part-time employees who have worked 500 hours per year for 3 consecutive years (and who are 21 years old at the end of the 3 year period).

• Auto enrollment 401(k) contribution limits will be increased to 15%. Previously, auto enrollment retirement plans were required to cap contributions at 10%.

• Also, stipends received by Graduate & Post-doctoral students will now be considered earned income for making IRA contributions.

While it may be too soon to understand all of the implications of these changes, we’re happy to be a resource for you. If you have any questions about what this means for your financial plan, don’t hesitate to contact us!

Kali Hassinger, CFP®, CDFA®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She has more than a decade of financial planning and insurance industry experience.

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This information has been obtained from sources considered to be reliable, but Raymond James Financial Services, Inc. does not guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Distributions may be subject to certain taxes. Guarantees are based on the claims paying ability of the issuing company. Changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Retirement Plan Contribution Limits and Other Adjustments for 2020

Contributed by: Nick Defenthaler, CFP®

Last month, the IRS released updated retirement account contribution and income limit figures for 2020. Like the recent Social Security cost of living adjustment, these adjustments are minor, but certainly worth noting.

Employer Retirement Plans (401k, 403b, 457, and Thrift Savings Plans)

• $19,500 annual contribution limit (up from $19,000 in 2019)

• $6,500 “catch-up” contribution for those over the age of 50 (up from $6,000 in 2019, and the first increase since 2015 for this contribution type)

• Total amount that can be contributed to a defined contribution plan, including all contribution types (employee deferrals, employer matching and profit sharing), increases to $57,000 (up from $56,000 in 2019) or $63,500 for those over the age of 50 ($6,500 catch-up)

o   Consider contributing after-tax funds, if available and cash flow allows for it.

It’s also worth noting that contribution limits to Traditional IRAs and Roth IRAs were left unchanged moving into 2020 ($6,000 under age 50, $7,000 over age 50).

In addition to the increased contribution limits for employer-sponsored retirement plans, the IRS adjustments provide other increases that can help savers in 2020. A couple of highlights include:

Traditional IRA deductibility income limits:

Contributions to a Traditional IRA may or may not be tax deductible, depending on your tax filing status, whether you are covered by a retirement plan through your employer, and your modified adjusted gross income (MAGI). The deductible amount of your Traditional IRA contribution is reduced (“phased out”) as your MAGI approaches the upper limits of the phase-out range. For example:

• Single

  • Covered under an employer-sponsored retirement plan
    2020 phase out: $65,000 - $75,000

• Married filing jointly

  • Spouse contributing to the IRA is covered under an employer-sponsored retirement plan
    2020 phase out: $104,000 - $124,000

  • Spouse contributing is not covered by an employer-sponsored plan, but the other spouse is covered under an employer-sponsored retirement plan
    2020 phase out: $196,000 - $206,000

Roth IRA contribution income limits:

Whether or not you can make the maximum contribution to a Roth IRA depends on your tax filing status and your MAGI. The contribution you are allowed to make is reduced ("phased out") as your MAGI approaches the upper limits of the phase-out range.

• Single

  • 2020 phase out: $124,000 - $139,000

• Married filing jointly

  • 2020 phase out: $196,000 - $206,000

If your income is over this limit, and you cannot make a regular annual contribution, you might consider a popular planning tool known as the “back-door” Roth conversion.

As we enter 2020, these updated figures will be on the forefront when updating your financial game plan. However, as always, if you have any questions surrounding these changes, feel free to reach out to our team!

Nick Defenthaler, CFP®, RICP®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® He contributed to a PBS documentary on the importance of saving for retirement and has been a trusted source for national media outlets, including CNBC, MSN Money, Financial Planning Magazine, and OnWallStreet.com.

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This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Contributions to a traditional IRA may be tax-deductible depending on the taxpayer's income, tax-filing status, and other factors. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty.

Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to itsx own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.

Great Expectations

Contributed by: Nicholas Boguth

We hear a lot about how stocks perform “on average”, and what to “expect” from stock returns:

• “On average, stocks return x%.”

• “You can expect stocks to return x% over the long run.”

• “We expect stocks to return x% per year.”

But what to expect and what is average are two very different things. In fact, average happens so rarely, that I would almost never expect the average. Let’s take a look at some numbers.

Below is a chart of one-year rolling returns for the S&P 500 since 1936. Every spot on that line represents the prior 12 months of returns. As you can see, it is quite sporadic. The “average” return for this set of data is +11.9%, but it ranges from -50% to more than +61%!

Return data from Morningstar Direct

When it comes to investing, realistic expectations are very important.

They keep us grounded and help us keep emotions out of the decision-making process. Don’t expect average returns every time you look at your stocks. Statistically speaking, since two standard deviations capture ~95% of data, it is safe to say you can expect somewhere between two standard deviations on any given period. If you are looking at one-year returns, that would be between -23% and +47%.

It is also important to remember your time horizon. Expectations over one year should be very different than expectations over 30 years. For reference, the entire range of 30-year returns for the S&P 500 since 1936 is between +9.1% and +14.7%.

S&P 500 TR index, monthly returns, 3/31/1936 to 10/31/2019

Lastly, we need to remember that this is only one asset class. If you have a diversified strategy, there is a good chance that large U.S. companies only make up a small percentage of your strategy. International companies, small and mid-sized companies, various bonds, and alternative strategies all merit different expectations. As financial advisors, it is our job to help you understand what to expect. Not sure what to expect? Give us a call.

Nicholas Boguth is an Investment Research Associate at Center for Financial Planning, Inc.® He performs investment research and assists with the management of client portfolios.

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Return data from Morningstar Direct. S&P 500 TR index, monthly returns, 3/31/1936 to 10/31/2019. Any opinions are those of Nicholas Boguth, Investment Research Associate, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility.

Capital Gains Distributions from Mutual Funds

Contributed by: Kali Hassinger, CFP®

Each November and December, investment companies must pay out their capital gains distributions for the year. If you hold these funds within a taxable brokerage account, distributions are taxable events, resulting from the sale of securities throughout the year.

Investors often meet these pay-outs with minimal enthusiasm, however, because there is no immediate economic gain from the distributions. That may seem counterintuitive, given that we refer to these distributions as capital gains! 

When capital gains distributions from mutual funds are paid to investors, that fund’s net asset value is reduced by the amount of the distribution.

This reduction occurs because the fund share price, or net asset value, is calculated by determining the total value of all stocks, bonds, and cash held in the fund’s portfolio, and then dividing the total by the number of outstanding shares. The total value of the portfolio is reduced after a distribution, so the price of the fund drops by the amount of the distribution.

In most situations we recommend that our clients reinvest mutual fund capital gain distributions,  given this is right for the investor's individual financial circumstances. 

This strategy allows you to purchase additional shares of the mutual fund while the price is reduced. Although your account value will not change, because the distribution reduces the fund’s net asset value, you have more shares in the future. By incurring the capital gain, you are also increasing your cost basis in the investment. 

As a counter point, If you rely on the dividend for income it might make more sense to take the mutual fund dividend as cash and not reinvest.

If you own mutual funds in a taxable account and expect the distributions to be large, you should work with your financial planner and tax advisor to weigh the advantages and disadvantages of owning the investment and ultimately incurring the capital gain.

Kali Hassinger, CFP®, CDFA®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She has more than a decade of financial planning and insurance industry experience.

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The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. Investments mentioned may not be suitable for all investors. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Raymond James and its advisors do not provide tax advice. You should discuss any tax matters with the appropriate professional. Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Every type of investment, including mutual funds, involves risk. Risk refers to the possibility that you will lose money (both principal and any earnings) or fail to make money on an investment. Changing market conditions can create fluctuations in the value of a mutual fund investment. In addition, there are fees and expenses associated with investing in mutual funds that do not usually occur when purchasing individual securities directly.

Planning for Retirement when Unexpected Events Occur

Contributed by: Sandra Adams, CFP®

This year, more than ever, I have found myself meeting with clients in the prime of their retirement planning years who have experienced some unexpected life events – events that might not normally be part of the retirement planning process.

What am I speaking of? I have had young pre-retirees experience terminal illnesses or become caregivers for spouses or family members, experience the loss of a spouse, experience divorce after a very long marriage but before retirement, and most recently, I have had some lose their long-time jobs with recent layoffs at companies like General Motors.

Losing a job is just one of many unexpected, pre-retirement events that can potentially throw savings goals and plans off course. Some may add that a very negative or extended stock market decline can also hinder retirement and, in most cases, is unexpected. As the old saying goes, you should always “expect the unexpected”.

What can you or should you do now to make sure that you can keep your retirement strategy on track, even if one of these unexpected events comes creeping into your life?

1. Plan Early and Update Often. Although many folks don’t like to think about it, start digging into how much you much income you will need in retirement. If your income projection is significantly less than you are bringing home now, what will change in retirement to make you need less income? Will you have significantly less debt? Will the activities you plan to do in retirement cost significantly less? Be realistic. Take stock on a regular basis of where you are towards your savings goals versus your needs, so that you stay on track and are able to update your strategy if you are not moving toward those goals.

2. Save, Save, and Then Save a Little More. When times are good, and while you can, stretch yourself to meet your savings goals. There is a delicate balance between spending to enjoy your life now and setting aside funds for your retirement. It makes sense to set significant retirement savings goals (especially if you didn’t start as early as you wanted to). And making it a habit to save more – even one percent each year – will help you reach or exceed your retirement savings goals. Other ways to get ahead can include allocating a portion of your annual raise or any bonus you might receive to retirement savings. Aim to save, save, and save a little more to put yourself in a position to absorb the unexpected.

3. Take Control of What You Can Control. While you cannot control what happens to the markets, your job (for the most part), or your health (other than eating right and exercising), there are things you can control. You can control your savings rate: You can be disciplined about saving, save regularly and continue to save more over time. You can save in the right places: You can attempt to max out your savings within your employer retirement savings plans on a tax-deferred basis, you can have a liquid cash emergency reserve fund of at least 3-6 months of expenses “in case” something unexpected comes up, and you can have an after-tax investment account and/or ROTH IRA (if your income tax bracket allows) in case a life event causes an earlier-than-expected retirement or a temporary unemployment situation. You can keep debt under control and plan to have as much debt paid off as possible going into retirement. Reducing fixed costs during retirement allows you to use your cash flow for wants versus needs, and provides you with greater flexibility if an unexpected event occurs.

4. Put Protections and Guardrails in Place. Planners like to call this “risk management”. We are talking about protection for contingencies, so they don’t sink your retirement ship. Having a reserve or emergency savings account is a good first step. But what else might you put in place? It’s important to have the right insurances – disability insurance, life insurance, and long-term care insurance. Continuing education and networking are also important protections – WHAT? Keep up your credentials and training, so that if your current job is phased out, you are prepared to quickly jump back on the horse and become re-employed. Many folks become complacent, and if something unexpected happens with their company or their role, are completely unprepared to seek new employment. Unfortunately, the U.S. Government Accountability Office estimates that older workers wait more than 40 weeks to become re-employed, so being prepared can make all of the difference.

5. Seek Good Advice. This is not a time to DIY. Way too many things can go wrong when it comes to a potential early retirement transition. Seeking the advice of a trained professional can help you find the best course of action. In most cases, assessing your specific situation and making the best possible decisions, especially when it comes to things like pensions, Social Security, and which accounts to tap for retirement income, can make a huge difference.

“The more things change, the more things stay the same” – Jean-Baptiste Alphonse Karr

When we do an initial financial plan for a client, we like to say that something will very likely change when the client walks out the door, and we will need to adjust the plan. Life happens. A financial plan must be fluid and flexible. And so must you, as someone who is planning for retirement. Unexpected events that happen just as you are reaching for the golden doorknob to retirement can be frustrating. But if you have expected the unexpected, planned for the contingencies, and have some spending flexibility built into your plan, you will be on your way to a long and successful retirement.

Sandra Adams, CFP®, CeFT™, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

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Opinions expressed in the attached article are those of Sandra D. Adams and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. 401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax, and if taken prior to age 59 ½, may be subject to a 10% federal tax penalty. Roth 401(k) plans are long-term retirement savings vehicles. Like Traditional IRAs, contributions limits apply to Roth IRAs. In addition, with a Roth IRA, your allowable contribution may be reduced or eliminated if your annual income exceeds certain limits. Contributions to a Roth IRA are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.

Webinar in Review: Year-End Tax and Planning Strategies

Contributed by: Robert Ingram, CFP®

With 2019 winding down and the holidays right around the corner, it’s understandable when our personal finances don’t always get our full attention this time of year. However, you should keep several important and timely tax and financial planning strategies top of mind before the year ends. During this 60-minute discussion, we will cover the following topics and more:

•       Tax planning strategies to consider for your investments and retirement accounts

•       Charitable giving in light of the recent tax law changes

•       Retirement planning tips and updates on 2020 contribution limits

If you weren’t able to attend the webinar live, we’d encourage you to check out the recording below.

There are time stamps provided so you can fast-forward to the topics you are most interested in.

• 3:00- Medicare Overview

• 6:30- Required Minimum Distributions (RMD)

• 12:00- Tax Reform Refresher & Income Tax Brackets

• 22:00- Long Term Capital Gains Rates

• 23:30- Efficient Charitable Giving & Donating Appreciated Securities

• 34:00- Roth IRA Conversions

• 41:00- Tax Efficient Investing & Tax Loss Harvesting

• 46:00- Employer Retirement Plans

• 49:00- Health Savings Accounts (HSA)

• 54:00- Gifting Ideas

Robert Ingram, CFP®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® With more than 15 years of industry experience, he is a trusted source for local media outlets and frequent contributor to The Center’s “Money Centered” blog.

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Changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While familiar with the tax provisions of the issues to be discussed, Raymond James and its advisors do not provide tax or legal advice. You should discuss tax or legal matters with the appropriate professional.

Trade War Winners and Losers

Contributed by: Jaclyn Jackson

Emboldened by NAFTA trade deal renegotiations with Mexico and Canada, car import taxation, and the U.S.-China trade war, protectionism is at the forefront of U.S. economic policy. As the world spotlight focuses on the U.S.-China trade war, many are watching to see how the battle between two of the largest world economies will play out, and how it will affect global economic interdependence.

For those keeping score, trade war winners and losers are as follows:

Winners

• Cheap Exporters (Vietnam, Taiwan, South Korea, Japan) - Companies have opted to move distribution from China to Vietnam in attempt to bypass U.S. tariffs. As of August 2019, the U.S. imports 40% more from Vietnam than it did in 2018. Cheap exporters win with more opportunities to improve their gross domestic product (GDP). In the case of Vietnam, exports to the U.S. are 26% of their 2019 GDP.

• Brazil - China imports 60% of soybeans traded worldwide. After Beijing issued a retaliatory 25% duty on U.S. imports, Brazil exported two million additional metric tons of soybeans to China between October and November of 2018.

• Manufacturing Sector - Fabricated metals, machinery, and electronic instrument industries doubled jobs from 15,000 to 30,000 between May 2018 and May 2019. Not to mention, of the 2.6 million new jobs added since tariff announcements, 204,000 of them were in the manufacturing sector.

Losers

• Consumers - Americans may feel the pain in their wallets, with increased prices of products impacted by the trade war.

• European Union - Opposite cheap exporters, the European Union (EU) is at risk of worsened gross domestic product. Currently, exports create 40% of GDP. Twelve percent of that GDP is generated from the United States. As the EU’s largest exporter and economy, Germany is at risk of being hit hardest.

Perspective Matters

Keep in mind that viewing the trade war through the lens of winners and losers is an oversimplification. The economic interconnectedness of globalization is quite complex. It’s no wonder many are scratching their heads when considering whether protectionist policies are helpful or harmful.

Also, the data tells conflicting stories. Case in point: the manufacturing industry. As explained above, the industry is experiencing domestic job growth, which would point to a benefit of protectionism. For balance, according to the Bureau of Labor Statistics, only six of the 20 major manufacturing categories have grown faster since tariff threats began. The other 14 have been either consistent or done worse. Notably, textile, paper, and chemical industries slumped, because of steel or softwood lumber tariff retaliation. Vehicle, technology, heavy equipment, and agriculture companies have suffered a similar fate. What’s more, some industries have cut jobs because of rising production costs from tariffs. General Motors, for example, lost $1 billion in 2018 and projects additional costs of the same amount this year. As a result, they’ve closed plants, subsequently fueling a strike by 46,000 employees. The pain doesn’t stop there; GM’s major suppliers have also lost vital business.

Opportunity Knocks

No doubt, international equities have taken one on the chin, and protectionist policies have not helped. In fact, international markets have underperformed the S&P 500 over the last seven years. However, if we zoom out a bit, historically low international valuations may indicate an entry point for long-term investors. The diagram below reflects less than average valuations for developed markets, Europe, Japan, and emerging markets. While trade war headlines impact emerging markets most, valuations urge investors to review these spaces further for investing potential.

Source: FactSet, MSCI, Standard & Poor’s, Thomson Reubers, J.P. Morgan Asset Management.

Additionally, looking at when international stocks have outperformed U.S. stocks between 1975 and 2015, we see a pattern; international and U.S. equity performance is generally cyclical. The data indicates that as the cyclical nature between U.S. stocks and international stocks shifts in favor of international stocks, long-term investors have a chance to recover the difference between current valuations and 25-year historical averages. It also punctuates the importance of portfolio diversification.

Chart: MSCI EAFE Index vs. S&P 500 Total Return Index. Source: FactSet, as of 12/31/15.

While it is unclear how protectionist policies will play out, and who will win or lose as a result, long-term trends must be considered. More importantly, investors must ask themselves whether protectionism will indefinitely deter international markets, or just force them to adapt and reimagine how world markets interact.

Jaclyn Jackson is a Portfolio Administrator at Center for Financial Planning, Inc.® She manages client portfolios and performs investment research.

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The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Jaclyn Jackson and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions. International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility.
Investing in emerging markets can be riskier than investing in well-established foreign markets. Investing involves risk and investors may incur a profit or a loss.
Investing in commodities is generally considered speculative because of the significant potential for investment loss. Their markets are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising.