Good News Abounds
The final quarter of 2019 capped off an outstanding year for investors, with all major stock market indexes enjoying strong levels of growth. The US stock market rose steadily throughout the quarter, taking only a brief pause at the end of November.
International markets fared similarly—the broad EAFE (Europe, Australasia & Far East) stock index meandered a bit in November, but rallied throughout the other two months of the quarter.
Bonds had limited movement during the last quarter due to a slight rise in interest rates. The Federal reserve left rates unchanged at their most recent meeting and may hold steady as we move through 2020. That said, if economic growth continues to slow, there’s a good chance we’ll see further rate cuts.
As we look towards 2020, the path is somewhat unclear. Recent economic news has shown continued slowing in many sectors, but surprising resilience in others. The risk of a recession remains, but we’ve been in similar situations during the last decade, only to see growth continue. Impeachment has dominated headlines recently, though from the standpoint of the economy and markets, it doesn’t matter. Investors look at fundamentals—economic growth, earnings, labor costs, etc.—and none of those factors have been affected by impeachment, nor are they likely to. The one risk is to consumer/business sentiment. Though it appears unlikely to occur, a long, drawn-out trial in the Senate could impact those confidence levels.
In late December, the SECURE Act was signed into law. This law impacts retirement accounts in a number of ways, among them:
- The age for required minimum distributions from pre-tax retirement plans (IRAs, etc.) has been raised from 70 1/2 to 72 for those beginning RMDs after 1/1/2020.
- The age limit for IRA contributions has been removed. If you have earned income, you can now make IRA contributions regardless of age (previously the cap was age 70 1/2.)
- Inherited IRAs must now be liquidated within 10 years and can no longer be stretched out over the recipient’s lifetime (only for those inheriting after 1/1/20).
- 529 education savings plans can be used for additional purposes, including
apprenticeships, homeschooling, and up to $10,000 towards qualified student loan repayments. - Various changes impacting 401(k) plans; including required eligibility for long-term, part-time workers and tax credits for small businesses adding retirement plans.
For additional information, we have published a more detailed summary of the SECURE Act on our website. As always, please contact us if you have any questions, comments, or concerns. Happy New Year!
