We welcome the New Year with a new law aimed at changing the way we think about retirement savings. President Biden signed the SECURE 2.0 bill on December 29, 2022, making the retirement package law. The package includes 90+ new provisions, including those designed to broaden access to workplace retirement plans and raise the age when required minimum distributions begin. Here are the top 10 takeaways we want you to be aware of.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 revised existing rules around retirement saving, including raising the age of required minimum distributions (RMDs) and eliminating age limits for traditional IRA contributions. There is now a new bill dubbed “SECURE Act 2.0”, that builds on the first to improve retirement savings opportunities for workers. If it has broad bipartisan support, there is a significant likelihood that it will pass this year, either as a standalone or as part of broader legislation.
Now's the time to compare Medicare plans for 2023. Visit Medicare.gov through December 7 to compare plans and make any changes. If you decide to change plans, your new coverage will start January 1. Why compare plans for next year? Plans change, and your health care needs, or situation may have changed, too. Think about what benefits matter to you and find a Medicare plan that fits your needs.
ARE YOU NOT ENTERTAINED?!?
Forgive me; no sooner had the words hit the page than it occurred to me that “entertained” is almost certainly not the word you would have chosen. Stunned perhaps? Or maybe nauseous would have been a better choice. A twenty-five percent bear market decline in stocks disrupted by sporadic and occasionally quite violent counter-trend rallies; a huge spike in the number of one to two percent swings up or down in the market from one day to the next and some of the largest intra-day reversals ever seen.
When deciding whether to rollover your 401(k) to an IRA, you should weigh the pros and cons to determine the option that protects your assets. A Rollover IRA is an account that allows you to move funds from your prior employer-sponsored retirement plan into an IRA. Carefully consider all your available options, which may include but not be limited to keeping your assets in your former employer's plan; rolling over assets to a new employer's plan; or taking a cash distribution (taxes and possible withdrawal penalties may apply).
Regardless of what your plans are for the future of the business, sooner or later, you will transition it to someone else. Either to family members, key employees, or some combination of the two. The transition is inevitable.
At Pacific Portfolio, we help facilitate the conversation between multiple parties, such as your close advisers and/or consultants that would be part of the business succession planning engagement. One of our goals would be to make sure that all advisors involved are in sync with one another.
In an ideal scenario, you get to control and be an integral part of the process, but that is not always the case. An unexpected death of an owner, key executive, or employee can damage a business if no successor is found and there is no plan.
Every business succession has their own unique characteristics, and not all are cut from the same cloth. Some owners want to exit entirely, at a certain date. Others want to stay involved to a lesser extent over time but never truly exit. These issues, and others, must be examined. The plan should be designed to:
Address expected timing
Designate one or more successor(s)
Indicate the value of the business
Allow for execution of the plan
Discuss communication with employees, customers, and family
Incorporate tax planning.
A proficient way to manage the process from what we’ve seen is by devoting ~9-12 months to the cause. Take a few months discussing the procedure with your family, executive employees, your bank, and other key stakeholders.
Contact your financial adviser, lawyer, and accountant, so they can get involved from the onset. Build and improve the plan over the next few months and put it into action over the last three or four months.
From our experience, we’ve found it critical to establish relationships with advisors ahead of the event. Therefore, we take the time to deeply understand our clients and their business, so that we establish long lasting mutual relationships with them from the onset.
On this not-to-be-missed episode of the Value of Time podcast, we’re diving deep into the bond market: at a time of rising inflation and interest rates, what should we expect, what can we do, and why the heck would we even want to own bonds at a time like this?! We’ll get the answers to all of this and more with industry veteran Eddie Bernhardt of Invesco.
BACK WHERE WE STARTED, HERE WE GO ‘ROUND AGAIN
Another year under our belts, another one already storming out of the gate. Before 2022 completely gets away from us, though, conventional wisdom dictates that, as investors, it is our duty to stop and scrutinize the books we only just barely closed this past December 31st. The purpose?
