Articles Categorized In: IAG News

Undo Your 2020 RMD

How often does the IRS give you permission to do something illegal?

If you own a beneficiary retirement account and took your Required Minimum Distribution (RMD) early in 2020, this could be your lucky day.

As you likely know, the Coronavirus Aid, Relief and Economic Security (CARES) Act signed into law earlier this year permitted taxpayers to skip taking their 2020 RMDs. This includes both taxpayers who have reached RMD age (either 70.5 or 72 depending on when you were born) and taxpayers who own beneficiary retirement accounts.

Blast From the Past – Road Trip, originally published April 4, 2018

With our weekly blog writer on vacation, we’d like to bring you a Blast From the Past with Scott’s blog, Road Trip, originally published April 4, 2018. A little over two years later, this seems incredibly timely.

Are you or your family planning a road trip this summer?

When your family takes a long road trip you can likely predict the overall attitude of the clan upon arrival based on two key ingredients: time and distance travelled.

While most families are really close, an extended period of time in close quarters can sometimes drive them apart. Quirky habits become annoyances. Conversations can run in circles. Games can run out of gas.

If the time invested in the car results in great progress toward a much-anticipated destination the family can maintain a positive attitude over time by focusing on that mutual goal.

Blast From the Past – Irrational Exuberance

Since our weekly blog writer, Scott Heins is on vacation this week, we thought we would bring you a Blast From the Past. This blog, Irrational Exuberance was originally published March 22, 2017.

One of the most frequent questions our clients are asking us these days is, “When will the market correction come?”

There is a sense that perhaps traders have bid up asset prices to unsustainable levels and a future price adjustment is inevitable and imminent – perhaps starting as soon as yesterday. We both agree and disagree with this sentiment.

We agree that asset prices appear to be fully priced based on long-term historical valuation metrics. We agree that a future price adjustment is inevitable as that happens almost every year. However, we disagree with the conclusion that this means a market correction is necessarily imminent.

March 23

Odds are increasing that March 23, 2020, was a significant bottom in the financial markets. There is always the possibility that this low will be retested if economic conditions deteriorate, but those odds shrink slightly with every day that goes by.

The days leading up to March 23 were filled with fear, including a harrowing one-day drop in the S&P 500 Index of 12% just one week earlier. The 34% tumble from the February 19 record highs was fastest onset of a bear market in history. Emotional traders were in outright panic selling mode.

But then two unexpected actions threw a wet blanket in the middle of this panic party, and a market bottom was born.

Experiment

Summer finally arrived in southern Wisconsin just in time for Memorial Day weekend.

After being cooped up by COVID-19, many people decided beautiful weather was just what they needed to be out and about this past weekend with family, friends, and even public crowds.

What happens over the next 7-10 days will likely have a significant impact on public health policy and the financial markets going forward.

If current COVID-19 cases start climbing we can expect more stringent social distancing requirements to be put in place and a negative reaction from traders who have been optimistically projecting a return to “normal” sooner rather than later.

Yearning for Earnings

Companies that earn profits are more desirable to own than those that don’t. That seems easy enough.

The real question is how early before profitability are you willing to own a company? Many companies lose money for years before they either gain traction or succumb to failure. Even companies like Apple and Microsoft were once floundering startups that faced numerous life-threatening challenges along the way to becoming global successes.

The current economic reshuffling makes it even harder to predict future earnings for companies big and small, and thousands of stock analysts are paid to calculate those predictions every day.

Puzzle

“Jigsaw Puzzle Industry Warns of A Shortage of Jigsaw Puzzles” blares the headlines. “Puzzles Sell Out During the Pandemic.”

Apparently my family is like many who must find cooperative activities for homebound family members. Since March we have had puzzles in varying states of completion on the dining room table for any family member that wants to help put the pieces together. Whether it is five minutes or an hour, working together can be fun.

It can also reveal what you are escaping.

Inflection

I sense that we have reached a quadruple inflection point in our country’s pandemic progress, and the next few weeks will be pivotal in determining how the rest of 2020 unfolds.

Inflection Point 1: Flattening the curve. The mantra since COVID-19 first appeared has been to “flatten the curve” to ensure our health care system is not overwhelmed like Italy. This strategy has worked except for a few isolated hotspots.

Safe

It turns out that making our contagious world safer by shutting down people’s lives is much easier than making it “more dangerous” again.

As I observe people’s varying viewpoints on the appropriate level of risk to take, I can’t help but surmise what their investment portfolio must look like.

Supersafers would likely prefer that Safer at Home restrictions be upgraded to Safest at Home. They were the first to adopt facemasks and self-isolate.

Halloween Candy

Six months ago it was October 15. Odds are you were at least thinking about carving pumpkins, buying or creating Halloween costumes, or maybe even picking up some Halloween candy.

Little did you know that that Halloween candy – or the candy collected by your children a couple of weeks later — would be serving as your primary rations during an economic shut down six months later. Or that the toilet paper mummy costume you saved for next year would prove so useful in a pinch.

Predicting what your life will be like six months into the future is really hard.