Dear Clients & Friends,
We hope this letter finds you healthy, and safe during this time. There is no question that COVID-19 will find a place in history books as an unprecedented event. That said, as your financial advisory team, we wanted to address a few important points.
We care deeply about each of you - not only financially, but your health and happiness. As we have said numerous times, your trust and confidence means the world to us. We do not take our responsibility to you lightly, in any market condition. Our team is following CDC guidelines by limiting face-to-face meetings, and working remotely when necessary. This WILL NOT disrupt our service model to you as valued clients. Please continue to contact us using our regular phone numbers and email. Our team has a remote work plan in place if necessary, and Janney has a business continuity process to ensure all of our resources and tools are accessible.
The uncertainty around COVID-19 has created a disruption in the markets. Many of you have been through market shocks before, and we will inevitably see them again down the road. They are uncomfortable, no question about it. One thing we take great confidence in, however, is the American spirit of resilience, innovation and action. We believe strongly that we will recover from this as a nation and the markets will follow suit. Our client relationships include deliberate financial plans based on each of your individual objectives and time horizons. Those plans can change based on new objectives or changes to time horizons, but typically not because of temporary market conditions. Some of our clients have taken advantage of lower equity valuations and invested available cash, and we would be happy to discuss whether this option fits within your specific financial plan. If you have any questions about your portfolio or would like to discuss any opportunities, please give us a call. If you have family or friends with questions or concerns, even if we don’t already have a relationship, we are happy to talk with those folks as well.
As a team, we do not discount that this is a fearful time for each of you. However, we want you to remember that this is why you hired a professional team of advisors. We will work diligently on your behalf during this time. As always, we will utilize the best and brightest minds in our business (economists, analysts and market strategists) to help us guide you during the coming weeks and months.
We will all get through this, and we look forward to many brighter days ahead on the horizon. Thank you.
Dan & Nellie
CLIENT EDUCATION: New CARES Act
On Friday, March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. This $2 trillion emergency relief package is intended to assist individuals and businesses during the ongoing coronavirus pandemic and accompanying economic crisis. Major relief provisions are summarized below.
Cares Act Relief for Your IRAs:
1. Up to $100,000 of “Coronavirus-Related Distributions” (known as CRDs) can be taken at any time in 2020 and repaid within three years for eligible individuals
2. The 10% premature distribution penalty is waived for clients under 59 ½ for eligible individuals
3. All required minimum distributions (RMDs) for 2020 are waived.
4. Prior to the CARES Act, the IRS pushed back the April 15, 2020 deadline for filing an individual tax return for 2019 to July 15, 2020.
5. 2019 IRA Contribution deadlines have also been pushed back to July 15, 2020.
Eligibility
Items 1 and 2 above are only available for those eligible to take “coronavirus-related distributions.” Eligible persons include:
• You, your spouse, or a dependent are diagnosed with coronavirus
• You experience adverse financial consequences as a result of the virus or disease
• Other factors as determined by the Secretary of the Treasury (or the Secretary’s delegate)
Retirement Plan Loans & Distributions
6. The maximum loan permitted from a 401(k) plan is increased from $50,000 to $100,000.
7. The law permits in-service distributions and provides an exception to the 10% early distribution penalty.
8. The Act also delays the due date for loan repayments for qualified individuals that are due between March 27, 2020 and December 31, 2020 for 1 year.
9. To take advantage of these provisions, the employee has to be impacted by COVID-19 but expectations are that employees will be allowed to self-certify that to the plan administrator under rules which the IRS is expected to issue shortly.
Changes to Charitable Contribution Deductions
Taxpayers can now deduct up to $300 in charitable contributions even if they do not itemize.
Individual Tax Rebates
Most individuals will receive a direct payment from the federal government. Technically a 2020 refundable income tax credit, the rebate amount will be calculated based on 2019 tax returns filed (2018 returns in cases where a 2019 return hasn't been filed) and sent automatically via check or direct deposit to qualifying individuals. To qualify for a payment, individuals generally must have a Social Security number and must not qualify as the dependent of another individual. See chart above.
With many individuals struggling in 2020 because of the coronavirus pandemic, having more flexibility on distributions and giving retirement portfolios another year to recover may be helpful. Consult with a qualified tax professional prior to making any decisions, and speak with us about any concerns you may have—especially during these uncertain times.
Clickherefor more details and further explanation about the CARES Act provisions including: student loan payment relief, small business loans, deferral of payment of payroll taxes by employers, expansion of unemployment compensation, business related changes, and health related changes.
What’s New with our team
A partner of ours shared a timeline of activity, including scheduled breaks, checking in with family and friends through Facebook and family time with movies and popcorn. It made us realize how appreciative we are that as the U.S. enters its second month of self-quarantine to prevent the spread of coronavirus, innovative internet companies have allowed us to be productive, connected and as comfortable as possible.
Dan has never cooked this much in his life. He has been trying many new recipes. The Honans celebrated Casey Honan’s 25th birthday virtually. Casey was happy to celebrate her 25th birthday with her sister and Dad via FaceTime.
Nellie has been spending her evenings running and practicing Virtual Yoga with Adrienne. She just finished reading the book “Lean In” by Sheryl Sandberg. (Highly recommend for all the ladies out there!)
Kelsey rented a spin bike from Jibe Cycling and has been spending her early mornings crushing virtual spin class in her living room. She has spent much of her free time helping her daughter, Liv, finish Kindergarten through Zoom Video Communications.
If you have any fun/clever/productive things you have been doing during this quarantine period, we would love to hear from you!
Market Commentary
Explore the Investment Strategy Groups’ perspective on what may be ahead for the economy, as well as the equity, fixed-income and municipal markets. Click the links below to read more.
Thank you for your business!
Good service is always worth sharing. We’re proud we have earned your confidence and trust, and we want to thank you for allowing us to work with you. If you have friends or family who would benefit from our expertise and experience, I hope you will allow us to contact them. If there is anything we can do to be of additional value and service to you please do not hesitate to reach out.
