Summer has ended and Fall has arrived. The weather turned cooler immediately and the stock market, after cooling considerably in September, is heating up again. Also heating up are COVID-19 infections and restrictions as the predicted seasonal wave appears to be arriving on time, as scheduled. We are seeing signs that the long-stalemated Congress on more aid may be breaking and a deal is on the horizon, potentially after President Donald Trump caught a case. Investors remain uncertain about the upcoming US Presidential election however stocks are rallying back from their recent lows while bonds are stable.

2020 has been an object lesson in how trying to predict anything will likely result in a failure to be correct. In the face of massive unemployment, bankruptcies, business closures and increasing poverty, financial markets have remained volatile but remain firm. As hope for a vaccine continues to rise and treatment options improve for COVID-19, a restoration and reinvention of the economy looms large for the country and indeed, the world. Central banks have staved off the first wave of economic malaise to a degree. The challenge for the next round taken up by elected leadership is to invest the stimulus, rather than simply spend it. These issues are massively complex and a discussion on just one of them could easily take up volumes. This issue will focus on the things that we can predict and control – our own financial planning.

As the fourth quarter begins, so does the season for giving. Clients with children and grandchildren can use ‘annual exclusion’ gifts. These allow any person to give any other person $15,000 per year without tax. Married couples can double that number. Often, but not always, the recipient is a minor and these funds can go to 529 plans, UTMA (custodial accounts), or trusts for safekeeping. If you are not sure what is best for your family, we can help you decide.

Giving to charitable organizations and other philanthropies is calendar year sensitive to get deductions on your tax return. We recommend using appreciated stock instead of cash to maximize the tax benefits, if available. So-called ‘donor advised funds’ are plentiful these days. If you know that you want to donate but are not sure exactly where to donate, you can use one of these funds to accelerate the deduction and release the funds to the charity in the future. Not all donations will qualify for a tax deduction so please call your CPA to discuss it.

Tax loss harvesting season is also here. After the year’s wild swings, we will be reviewing portfolios and realizing losses, if appropriate, in taxable accounts. This will not result in a material allocation change but rather a swap into a security with similar exposure. You will ‘realize’ the loss for tax purposes.

Required minimum distributions from retirement accounts for 2020 were suspended by the CARES Act. Therefore, we will not be processing these as we ordinarily do at this time of year. However, if you would like to receive a distribution, then please contact us to arrange for one.

 

Finally, if you are an employee of a medium or large firm with comprehensive benefit packages, now is also the time of year to renew insurance coverages like health and disability insurance. We are available to help you decide the best choices amongst your available ones. We wish you a safe and healthy season!

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Regards,

Scott

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