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                    [post_date] => 2023-02-02 09:22:13
                    [post_date_gmt] => 2023-02-02 15:22:13
                    [post_content] => By Kevin Oleszewski CFP®, MST, EA, Senior Wealth Planner

Multiple retirement savings vehicles are available but having options can be overwhelming. Each option comes with different rules leading to a variance of outcomes in the short-term and long-term. It’s not that dissimilar to choosing what to eat. There are options which are satisfying in the short-term but may necessitate a more vigorous workout later to compensate. Other menu options might be less satisfying immediately but reduce the need to work out as intensely. Similar to how different foods affect the way the body is fueled, retirement contribution choices affect the fuel for retirement. How you save is just as important as how much you save.

Traditional IRA vs. Roth IRA

One example of two similar, yet very different, retirement saving vehicles are Traditional IRAs and Roth IRAs. Both are Individual Retirement Accounts meaning the account is opened and funded by the worker and are tax-advantaged accounts designed for retirement savings. Certain other types of retirement accounts are sponsored by employers and can be funded with both worker and employer contributions. Traditional and Roth IRAs can be distinguished by their tax treatment. So how do they differ and how does each fuel retirement?

Traditional IRA

The Traditional IRA is what usually comes to mind when hearing about an IRA. Often, it’s called a simple IRA, whereas a Roth IRA goes by its full name or Roth for short. The features commonly associated with an IRA include tax-deductible contributions and tax-deferred growth. Because Traditional IRA contributions are made during income-earning years for a time when earned income ends or is reduced (and tax liabilities are frequently lower), the IRA can be a nice way to reduce the current income tax liability while also targeting retirement saving goals. Traditional IRAs provide tax benefits at the point of contribution for those within the income limits for qualification of a tax deduction. Whether an employer-sponsored retirement plan is offered affects the income limits for contribution deductibility. In 2023, for example, the Modified Adjusted Gross Income (MAGI) limits are as follows:
Single / Head of Household Married Filing Jointly Married Filing Separately
No Employer Retirement Plan No Limit Phase Out $218,000 - $228,000   No Limit if spouse is not covered by a plan Phase Out $1 - $10,000   No Limit if spouse is not covered by a plan
Employer Retirement Plan Phase Out $73,000 - $83,000 Phase Out $116,000 - $136,000 Phase Out $1 - $10,000
If MAGI exceeds the limits to qualify for an income tax deduction, contributions to a Traditional IRA can still occur. The nondeductible IRA contributions will not provide in an income tax deduction, but the account will still benefit from tax-deferred growth. The trade-off for tax-deductible contributions is taxable distributions. IRA distributions can occur at any time but may be subject to an additional 10% penalty if the account owner is under age 59½. Distributions of pre-tax contributions and the earnings are includible in taxable income.  Alternatively, nondeductible contributions increase basis in the account and distribution of the basis is not taxable. The earnings, however, on non-deductible contributions are taxable.  Leaving the assets inside the account to avoid taxable distributions cannot continue indefinitely.  At age 73, a minimum amount must be distributed from Traditional IRAs. These distributions are known as required minimum distributions (RMDs), and the penalty for failure to take the distribution is 50% of the short-fall.

Roth IRA

Like the Traditional IRA, the Roth IRA (Roth) benefits from tax-deferred growth. Unlike the Traditional IRA, Roth account contributions are not tax-deductible. Roth accounts, however, have two attractive features the IRA does not offer: tax-free distributions and no required minimum distribution necessity. Because minimum distributions are not required, Roth accounts can benefit from tax-deferred growth until the account owner chooses to take a distribution. Roth assets can be used to manage taxable income during retirement by providing a tax-free stream of income and funds not withdrawn before death maintain their tax character for the account beneficiary. Only qualified Roth distributions are tax-free and penalty-free so it’s a good idea to know the requirements for a distribution to be qualified:
  • Over age 59½ AND at least 5 years has passed since the Roth was first opened and funded
  • Death or disability
  • Qualified first-time home purchase
Non-qualified distributions are subject to a 10% penalty unless an exception applies:
  • Distributions part of a series of substantially equal payments (greater of 5 years or age 59½)
  • Unreimbursed medical expenses exceeding 10% AGI
  • Medical insurance premiums after a job loss
  • Distributions not more than qualified higher education expenses (self or eligible family)
  • Distributions due to an IRS levy
  • Qualified reservist distribution
  • Qualified disaster recovery assistance distribution
Not everyone is eligible to contribute directly to a Roth IRA. Income limits, based on MAGI, exist as follows:
Single / Head of Household Married Filing Jointly Married Filing Separately
  Phase Out $138,000 - $153,000   Phase Out $218,000 - $228,000 Phase Out $1 - $10,000
Individuals not eligible to save directly into a Roth IRA could consider a backdoor Roth IRA contribution. The backdoor Roth contribution is a 2-step process beginning with a non-deductible contribution to a Traditional IRA.  Then the contribution is immediately converted to a Roth. Individuals with existing Traditional IRA balances, especially if the result of tax-deductible contributions, should work closely with their CPA because the conversion could be a taxable event. For those eligible to make tax-deductible IRA contributions and full Roth IRA contributions, it can be tough to decide which account to contribute or the best combination among the two. The maximum contribution amount to Traditional and Roth IRAs in 2023 is $6,500, and those age 50 and over may also make a catch-up contribution of an additional $1,000. That $6,500 contribution can be made entirely to a Traditional IRA, entirely to a Roth IRA, or some combination of the two as long as the contribution amount in total does not exceed the limit and catch-up amount, if applicable. Just as dietary choices have short-term and long-term implications, Traditional and Roth IRA contributions have variances in their short-term and long-term impact. Choosing which IRA works for you is best done with careful consideration, and it all starts with making the decision to build wealth for the future. For more free information from a financial professional, download a free guide for additional insights on everything from investment advice and financial advisors to tax rates and the Internal Revenue Service.
  [post_title] => Should I Open a Traditional or Roth IRA? [post_excerpt] => Multiple retirement savings vehicles are available but having options can be overwhelming. Each option comes with different rules leading to a variance of outcomes in the short-term and long-term. It’s not that dissimilar to choosing what to eat. [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => should-you-invest-in-a-roth-or-traditional-ira [to_ping] => [pinged] => [post_modified] => 2023-02-02 10:21:28 [post_modified_gmt] => 2023-02-02 16:21:28 [post_content_filtered] => [post_parent] => 0 [guid] => https://divi-partner-template.carsonwealth.com/?p=17967 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [1] => WP_Post Object ( [ID] => 65998 [post_author] => 90034 [post_date] => 2023-01-25 13:02:37 [post_date_gmt] => 2023-01-25 19:02:37 [post_content] => At long last, The Carson Investment Research team is proud to officially release our 2023 Market and Economic Outlook, aptly titled Outlook ’23: The Edge of Normal. You can download the whitepaper here. As you are all painfully aware, 2022 wasn’t pretty for investors – it was the first year to ever see both stocks and bonds down 10% or more. Higher-than-expected inflation was the theme of 2022, surging to the highest level since 1981. Add an aggressive Federal Reserve and an unfortunate war in Ukraine, and the result was a very poor year for investors and growing uncertainty for the U.S. and global economies. A bleak year, no doubt, but where do we go from here? We in the Carson Research team believe there are many potential reasons to be optimistic about the year ahead. For example, Inflation already started to pull back in the second half of 2022, and 2023 may actually be disinflationary, with several factors that drove inflation higher last year reversing this year. This could allow the Fed to slow down on the aggressive policy stance, and although it won’t be easy, we think there’s an above-average chance we can avoid a recession in 2023. Much like you don’t drive looking out of the rearview mirror, to look backward to predict what could be next isn’t wise. Housing and manufacturing could be headed to recessions, but the consumer remains the most important and largest part of the economy, and they are still very healthy. Just because 2022 was a poor year for stocks and bonds doesn’t mean the same will be true for 2023 (past performance isn’t indicative of future results). Stocks and bonds could bounce back nicely, with the potential for stocks to lead the way higher and for bonds to begin meaningfully contributing to investors’ portfolios again. We expect stocks to produce a total return of between 12% to 15% in 2023. We also expect a more normal year for bonds, with most of the return coming from yield. Our expectation is that the Bloomberg US Aggregate Bond Index may produce a total return between 4% to 5% in 2023. You can read the full Outlook ’23: The Edge of Normal here. We hope you find it useful! If you’d like to discuss the report further, or talk about what 2023 might mean for your finances, please reach out. Schedule a conversation.
  The views stated in this article, are not necessarily the opinion of Cetera Advisor Networks LLC or CWM, LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change with notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. [post_title] => Carson Investment Research’s Outlook '23: The Edge of Normal [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => carson-investment-researchs-outlook-23-the-edge-of-normal [to_ping] => [pinged] => [post_modified] => 2023-01-30 12:33:21 [post_modified_gmt] => 2023-01-30 18:33:21 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?p=65631 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [2] => WP_Post Object ( [ID] => 65996 [post_author] => 182385 [post_date] => 2023-01-25 12:34:26 [post_date_gmt] => 2023-01-25 18:34:26 [post_content] => Mike Valenti, CPA, CFP®, Director of Tax Planning
Tom Fridrich, JD, CLU, ChFC®, Senior Wealth Planner
It’s January, so it’s officially tax season! One of the most common client questions heard by tax preparers is, “So, what do you need from me?” The short answer to that question is often, “Everything.” But that isn’t helpful, nor is it entirely true. Let’s dig into what your tax preparer needs from you to prepare your tax return efficiently and in a timely manner.

Communication Is Key

Your preparer should tell you when to expect the engagement letters, organizers, etc., and when they need all the information by to finalize or extend the return before the deadline. Adhering to their timeline and providing documents in the instructed manner (such as through a client portal or a secure drop box) will reduce any back and forth and minimize the chance that your preparer misses something you already provided. If you’re asked to complete a questionnaire or organizer, there’s a reason why. Those two documents cover most, if not all, of what you will need to provide for your return to be complete and accurate. Most of life’s major events have a tax impact, so it’s important to keep your preparer apprised. Marriage, divorce, births/adoptions, deaths, home purchases and sales, new business ventures and side hustles, and inheritances are a few examples of events that have tax consequences.

Documentation Needed for Your Tax Return

Any government-issued forms, such as W-2s, 1099s, 1098s, and K-1s, you receive are all reported to the IRS. If your return is missing information reported on one of these forms, the IRS and state taxing authorities will reconcile your return and issue notice adjusting the return to match what was reported. This can result in additional tax owed, plus penalties and interest. Other information, such as business income and expenses, medical expenses, charitable contributions, and some tax strategies, is not reported to the IRS and sufficient records must be maintained. Examples of income reported to the IRS:
  • Form W-2
  • Form 1099s from all sources, including:
    1. • Bank interest
    2. • Brokerage accounts
    3. • Stock dividends
    4. • Stock sales
    5. • Sale of real estate
    6. • Nonemployee business income/payments on the 1099-NEC
    7. • Social Security
    8. • Retirement account distributions and other retirement income
    9. • Cancellation of debt
    10. • Unemployment, state tax refunds, and other government payments
    11. • 529 distributions
    12. • Rents and royalties
    13. • Miscellaneous income
  • Form K-1s from all sources, including:
    1. • Trusts
    2. • Partnerships
    3. • S Corporations
Examples of expenses and contributions reported to the IRS:
  • Form 1098s from all sources, including:
    1. • Mortgage interest
    2. • Tuition
    3. • Student loan interest
  • Form 5498s with retirement account information
Examples of information not reported to the IRS and require adequate record keeping:
  • Business income and expenses
  • Medical expenses
  • Charitable contributions, including Donor Advised Funds and Qualified Charitable Distributions
  • State and local tax payments, including real estate, personal property, and sales taxes
  • Contributions to tax-advantaged accounts, including IRAs, 529s, and HSAs
  • Tax basis for equity compensation transactions
For information not reported to the IRS – such as business income and expenses, charitable contributions, and medical expenses – it’s important to keep accurate and contemporaneous records. You’ll also want to keep any supporting documentation, such as receipts and transactions histories, as the IRS may ask you to support the number reported on the return. However, you should provide the total number for each income and expense category to your preparer first and offer to provide supporting documentation if needed. For example, if you donate food to the local food pantry every week, you should keep physical or digital receipts of purchase and donation, but your preparer may be content with a summary of the donations and ask you to hold on to the receipts. You should also track estimated tax payments. You might think that the IRS and states would be able to track payments accurately, but that is often not the case. Even if labeled properly, sometimes taxing authorities do not credit tax payments to the correct tax year, and matching errors occur. Keep a record of the payments, with payment confirmations and cancelled checks, and provide those to the preparer.

What If I Need to File an Extension?

For many taxpayers, not all the information is available to file a return by the April 15 deadline (March 15 for corporate and partnership filers). K-1s are a common reason for extending, as returns for entities issuing K-1s generally require additional time given the complexity of the return. Sometimes life events make it impractical or too stressful to collect all the documents on time. It’s okay to extend if you need to do so. There is no penalty or downside to filing an extension. Once extended, the filing deadline for individual returns is October 15 (September 15 for corporate and partnership filers, September 30 for trusts and estates). Please note that an extension is an extension of time to file the return, not to pay the tax due. The IRS still requires 100% of the total tax liability be paid or withheld by the April 15 deadline. This is an important distinction. Your preparer should be able to assist you in filing an extension and making the requisite payments. Many preparers have a due date (usually mid-March) for you to provide documents in order to file the return before the April 15 deadline. If you think you may be unable to provide all your information by that date, talk to your preparer to determine whether an extension is appropriate.

Provide All the Documentation as Early as Possible

Most tax documents are issued in January. Brokerage account 1099s are typically available by mid-February. The quicker you can provide all the documents to your preparer, the earlier your return can be prepared. Avoid sending documents one-by-one – sending all the documents at once to your preparer will allow them to start working on the return sooner. If you have all but one or two documents, ask your preparer for their preference as to when you should send in your tax documents. Tax season is rarely fun, but a great working relationship with your tax preparer can reduce the stress caused by April 15. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice. [post_title] => What Documents You Should Provide to Your Tax Preparer [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => what-documents-you-should-provide-to-your-tax-preparer [to_ping] => [pinged] => [post_modified] => 2023-01-25 13:01:51 [post_modified_gmt] => 2023-01-25 19:01:51 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?p=65628 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [3] => WP_Post Object ( [ID] => 62500 [post_author] => 99865 [post_date] => 2023-01-05 17:05:19 [post_date_gmt] => 2023-01-05 23:05:19 [post_content] => There’s more to tax planning than you think. Do you understand how each of your accounts are taxed? How did you set up your retirement plan? Have you considered an HSA? Take control of your taxes and how they fit into the big picture. Check out these income tax planning tips. Click here to open fullscreen [post_title] => 10 Tax Planning Tips That Could Reduce Your Taxes [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => 10-tax-planning-tips-your-cpa-might-have-missed [to_ping] => [pinged] => [post_modified] => 2023-02-02 11:43:39 [post_modified_gmt] => 2023-02-02 17:43:39 [post_content_filtered] => [post_parent] => 0 [guid] => https://pangeawealth1.carsonwealth.com/insights/blog/10-tax-planning-tips-your-cpa-might-have-missed/ [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [4] => WP_Post Object ( [ID] => 65960 [post_author] => 182385 [post_date] => 2023-01-05 13:15:41 [post_date_gmt] => 2023-01-05 19:15:41 [post_content] => Mike Valenti, CPA, CFP®, Director of Tax Planning Qualified retirement plans – such as 401(k)s, 403(b)s and IRAs – offer clear tax advantages. Traditional 401(k)s, 403(b)s, and IRAs offer a tax deferral on contributions and growth until distribution. Their Roth counterparts can provide an inverse benefit: Contributions are taxed up front, but growth and qualified distributions are tax-free. To prevent individuals from taking advantage of the tax-deferred growth in perpetuity, there are certain rules in place. One of those is the Required Minimum Distribution (RMD) rule. Taxpayers with qualified retirement accounts are required to start taking distributions from the accounts once a certain age is reached. That age was 70½ prior to 2020, 72 from 2020 to 2022, and will be 73 starting in 2023 with the passage of the SECURE 2.0 Act. The bill also includes a provision to increase the RMD age in ten years to 75. Note: those who are beneficiaries of inherited retirement accounts may also be subject to RMDs, but that topic is not covered here.

RMD Basics

The RMD rules apply to all employer-sponsored qualified retirement accounts (401(k)s, 403(b)s, etc.) and IRAs, with exception of Roth IRAs – and beginning in 2024, due to the SECURE 2.0 Act provisions, Roth 401(k)s. If someone is still working at or beyond the RMD age and their company offers a qualified retirement plan such as a 401(k), the distribution requirement for that plan specifically is deferred until the person retires or otherwise stops working for that company. If you own more than 5% of the company when you hit your required beginning age you would still need to take RMDs from that company plan. Due to the mechanics of the RMD age increase from 72 to 73 in 2023, a smaller subset of people will be required to take their first distribution in 2023. If you turned 72 in 2022, your first RMD would need to come out by April 1, 2023 and a second RMD, for 2023, would need to be distributed by December 31, 2023. Thus, the only people required to take their first RMD in 2023 will be those who continued to work past the RMD age and are retiring in 2023. The RMD amount – the minimum amount that must be withdrawn and subject to tax – is calculated using life-expectancy tables provided by the IRS. The intent is to draw down tax-advantaged retirement accounts over the life of the taxpayer. As a result, the minimum distribution amount will change every year depending on the current age factor and the prior year’s distributions and market performance. The minimum distribution is required to be taken by year-end, with one exception. In the first year an RMD is required to be taken, there is a three-month grace period and the distribution needs to be taken by April 1st of the following year to avoid penalty. The second year’s RMD is still required to be taken that year, so this does result in two distributions the second year. The RMD age should not be confused with the age 59½ threshold, which is when an individual can start taking distributions without penalty.

How to Calculate Your RMD Amount

As noted above, the minimum distribution is calculated by using a formula based on a life expectancy factor provided by the IRS, which can be referenced in IRS Publication 590-B. The factor is primarily based on age, but also the spouse’s age, if applicable. Most people will use the Uniform Life Expectancy Table, but those with spouses 10+ years younger who are the sole beneficiaries of the account are subject to the Joint Life and Last Survivor Expectancy Table, which takes into account that the younger spouse may live significantly longer and may rely on the inherited assets well past the death of the first spouse. To calculate the RMD, the balance of the applicable accounts on the last day of the prior tax year (December 31, 2022 for 2023 distributions) is divided by the life expectancy factor. While there is not a requirement to take distributions from every single account, i.e., a distribution from one IRA can suffice for all IRAs, there is a distinction between IRAs and employer-sponsored accounts. If you have IRAs and a 401(k), two pro rata distributions must be taken: one from an IRA to meet the RMD for the collective IRAs and one from the 401(k) to cover for the employer-sponsored plan(s). For a simple example, assume you are 73, single or have a spouse the same age and have $50,000 in a 401(k) and $50,000 in an IRA for a total of $100,000. Your life expectancy factor is 26.5. Divide $100,000 by 26.5 and your total RMD for the year is $3,774, and furthermore, at least $1,887 is required to be withdrawn from each account.

How to Take the RMD

To take the distribution, you must direct the account custodian to make the distribution. There will be a form to fill out, which includes how much to withdraw, when to withdraw, how and where the distribution will be paid, and how much in taxes to withhold. The default federal tax withholding is 10%, but you can request specific amounts or percentages to be withheld for federal and state taxes. Some custodians will allow you to set up automatic distributions, which can be helpful if you have multiple and/or smaller accounts to ensure the RMD is not missed. For tax reporting purposes, you will get a 1099R that lists the distributions and taxes withheld. You should always provide this form to your tax preparer. Prior to 2023, failing to take the RMD could result in a costly 50% penalty on the minimum distribution not taken. Due the SECURE 2.0 Act, the amount not withdrawn is now penalized at 25%, with a reduction to 10% if corrected in a timely manner.

Choosing an RMD Strategy for You

In the first year, although you have grace period, it generally makes sense to take the first RMD to reduce the overall tax liability. However, in certain circumstances, it could be worth considering a delay until the following year. As examples, if you are retiring this year with a sizeable severance package or you expect to have significant gains (perhaps from the sale of property), it could make sense to defer the income to the following year. You will double up on your RMDs in 2024, but you'll be paying less in taxes overall if properly planned. A very common planning strategy involving RMDs is to use them as a vehicle to withhold taxes. Once you have a good idea of what your net tax liability will be for the year – typically in November or December – you can take your distribution and withhold the necessary taxes needed for the year. The custodian will then pay federal and state tax authorities and remit the balance to you. This is generally more attractive than making estimated tax payments during the year because the tax withheld from your RMD is considered ratably paid throughout the year and can reduce the chance of an underpayment penalty due to a timing mismatch between income and estimated payments. There is no limit on the number of distributions you can pull throughout the year, other than what your custodian may impose. You can take them yearly, monthly, or even bi-weekly if you wish, to cover living expenses. Additionally, there is no maximum distribution other than the account’s balance. If, for example, your RMD is $100,000, but you need $120,000 for living expenses, you can withdraw $120,000 or more to meet your needs. Perhaps a monthly distribution of $10,000 is more attractive. On top of those distributions, you could take a year-end distribution to cover the expected tax liability.

Consult with Your Advisors

Given the complexity of the RMD calculation and process, you should always consult with your financial planner and/or tax advisor to discuss how much to withdraw, how much to withhold, and when to take to the distributions as you near age 73. Jamie is not registered with CWM, LLC as an investment advisor representative and does not provide product recommendations or investment advice. Distributions from traditional IRA’s and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59 ½, may be subject to an additional 10% IRS tax penalty. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. CWM, LLC, any other named entity or any of their representatives may not give legal or tax advice. [post_title] => Planning for Your First Required Minimum Distribution in Retirement [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => planning-for-your-first-required-minimum-distribution-in-retirement [to_ping] => [pinged] => [post_modified] => 2023-01-17 09:34:23 [post_modified_gmt] => 2023-01-17 15:34:23 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?p=65589 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) ) [post_count] => 5 [current_post] => -1 [in_the_loop] => [post] => WP_Post Object ( [ID] => 17967 [post_author] => 181805 [post_date] => 2023-02-02 09:22:13 [post_date_gmt] => 2023-02-02 15:22:13 [post_content] => By Kevin Oleszewski CFP®, MST, EA, Senior Wealth Planner Multiple retirement savings vehicles are available but having options can be overwhelming. Each option comes with different rules leading to a variance of outcomes in the short-term and long-term. It’s not that dissimilar to choosing what to eat. There are options which are satisfying in the short-term but may necessitate a more vigorous workout later to compensate. Other menu options might be less satisfying immediately but reduce the need to work out as intensely. Similar to how different foods affect the way the body is fueled, retirement contribution choices affect the fuel for retirement. How you save is just as important as how much you save.

Traditional IRA vs. Roth IRA

One example of two similar, yet very different, retirement saving vehicles are Traditional IRAs and Roth IRAs. Both are Individual Retirement Accounts meaning the account is opened and funded by the worker and are tax-advantaged accounts designed for retirement savings. Certain other types of retirement accounts are sponsored by employers and can be funded with both worker and employer contributions. Traditional and Roth IRAs can be distinguished by their tax treatment. So how do they differ and how does each fuel retirement?

Traditional IRA

The Traditional IRA is what usually comes to mind when hearing about an IRA. Often, it’s called a simple IRA, whereas a Roth IRA goes by its full name or Roth for short. The features commonly associated with an IRA include tax-deductible contributions and tax-deferred growth. Because Traditional IRA contributions are made during income-earning years for a time when earned income ends or is reduced (and tax liabilities are frequently lower), the IRA can be a nice way to reduce the current income tax liability while also targeting retirement saving goals. Traditional IRAs provide tax benefits at the point of contribution for those within the income limits for qualification of a tax deduction. Whether an employer-sponsored retirement plan is offered affects the income limits for contribution deductibility. In 2023, for example, the Modified Adjusted Gross Income (MAGI) limits are as follows:
Single / Head of Household Married Filing Jointly Married Filing Separately
No Employer Retirement Plan No Limit Phase Out $218,000 - $228,000   No Limit if spouse is not covered by a plan Phase Out $1 - $10,000   No Limit if spouse is not covered by a plan
Employer Retirement Plan Phase Out $73,000 - $83,000 Phase Out $116,000 - $136,000 Phase Out $1 - $10,000
If MAGI exceeds the limits to qualify for an income tax deduction, contributions to a Traditional IRA can still occur. The nondeductible IRA contributions will not provide in an income tax deduction, but the account will still benefit from tax-deferred growth. The trade-off for tax-deductible contributions is taxable distributions. IRA distributions can occur at any time but may be subject to an additional 10% penalty if the account owner is under age 59½. Distributions of pre-tax contributions and the earnings are includible in taxable income.  Alternatively, nondeductible contributions increase basis in the account and distribution of the basis is not taxable. The earnings, however, on non-deductible contributions are taxable.  Leaving the assets inside the account to avoid taxable distributions cannot continue indefinitely.  At age 73, a minimum amount must be distributed from Traditional IRAs. These distributions are known as required minimum distributions (RMDs), and the penalty for failure to take the distribution is 50% of the short-fall.

Roth IRA

Like the Traditional IRA, the Roth IRA (Roth) benefits from tax-deferred growth. Unlike the Traditional IRA, Roth account contributions are not tax-deductible. Roth accounts, however, have two attractive features the IRA does not offer: tax-free distributions and no required minimum distribution necessity. Because minimum distributions are not required, Roth accounts can benefit from tax-deferred growth until the account owner chooses to take a distribution. Roth assets can be used to manage taxable income during retirement by providing a tax-free stream of income and funds not withdrawn before death maintain their tax character for the account beneficiary. Only qualified Roth distributions are tax-free and penalty-free so it’s a good idea to know the requirements for a distribution to be qualified:
  • Over age 59½ AND at least 5 years has passed since the Roth was first opened and funded
  • Death or disability
  • Qualified first-time home purchase
Non-qualified distributions are subject to a 10% penalty unless an exception applies:
  • Distributions part of a series of substantially equal payments (greater of 5 years or age 59½)
  • Unreimbursed medical expenses exceeding 10% AGI
  • Medical insurance premiums after a job loss
  • Distributions not more than qualified higher education expenses (self or eligible family)
  • Distributions due to an IRS levy
  • Qualified reservist distribution
  • Qualified disaster recovery assistance distribution
Not everyone is eligible to contribute directly to a Roth IRA. Income limits, based on MAGI, exist as follows:
Single / Head of Household Married Filing Jointly Married Filing Separately
  Phase Out $138,000 - $153,000   Phase Out $218,000 - $228,000 Phase Out $1 - $10,000
Individuals not eligible to save directly into a Roth IRA could consider a backdoor Roth IRA contribution. The backdoor Roth contribution is a 2-step process beginning with a non-deductible contribution to a Traditional IRA.  Then the contribution is immediately converted to a Roth. Individuals with existing Traditional IRA balances, especially if the result of tax-deductible contributions, should work closely with their CPA because the conversion could be a taxable event. For those eligible to make tax-deductible IRA contributions and full Roth IRA contributions, it can be tough to decide which account to contribute or the best combination among the two. The maximum contribution amount to Traditional and Roth IRAs in 2023 is $6,500, and those age 50 and over may also make a catch-up contribution of an additional $1,000. That $6,500 contribution can be made entirely to a Traditional IRA, entirely to a Roth IRA, or some combination of the two as long as the contribution amount in total does not exceed the limit and catch-up amount, if applicable. Just as dietary choices have short-term and long-term implications, Traditional and Roth IRA contributions have variances in their short-term and long-term impact. Choosing which IRA works for you is best done with careful consideration, and it all starts with making the decision to build wealth for the future. For more free information from a financial professional, download a free guide for additional insights on everything from investment advice and financial advisors to tax rates and the Internal Revenue Service.
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Should I Open a Traditional or Roth IRA?

Multiple retirement savings vehicles are available but having options can be overwhelming. Each option comes with different rules leading to a variance of outcomes in the short-term and long-term. It’s not that dissimilar to choosing what to eat.
Continue Reading!
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The following topics are important to keep in mind as you navigate the various individual and employer-sponsored plans that may be available to you.

Download the checklist today to get started.   [post_title] => 7 Important Retirement Savings Topics for 2023 [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => 7-important-retirement-savings-topics-for-2023 [to_ping] => [pinged] => [post_modified] => 2023-02-02 13:24:25 [post_modified_gmt] => 2023-02-02 19:24:25 [post_content_filtered] => [post_parent] => 0 [guid] => https://pages.carsonhub.wpengine.com/_resource?guidekey=the-complete-guide-to-the-SECURE-2-0-Act [menu_order] => 0 [post_type] => free-guides [post_mime_type] => [comment_count] => 0 [filter] => raw ) [1] => WP_Post Object ( [ID] => 65242 [post_author] => 181142 [post_date] => 2023-01-05 09:52:37 [post_date_gmt] => 2023-01-05 15:52:37 [post_content] => Tax planning takes into account the larger picture of your investments, assets, estate strategy and other parts of life to protect your finances over decades – not just hope to do better than last year’s income tax return. From your personal healthcare and retirement plans to working within changes to the tax code, you'll find tax planning opportunities that are easy to miss, but could save you thousands. Download Guide   [post_title] => 10 Tax Planning Tips That Could Reduce Your Taxes [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => ten-tax-tips [to_ping] => [pinged] => [post_modified] => 2023-02-04 00:19:25 [post_modified_gmt] => 2023-02-04 06:19:25 [post_content_filtered] => [post_parent] => 0 [guid] => https://pages.carsonwealth.com/LDqAAO_resource?guidekey=10-tax-planning-tips [menu_order] => 0 [post_type] => free-guides [post_mime_type] => [comment_count] => 0 [filter] => raw ) [2] => WP_Post Object ( [ID] => 65953 [post_author] => 90034 [post_date] => 2022-12-28 10:38:11 [post_date_gmt] => 2022-12-28 16:38:11 [post_content] => After multiple attempts at retirement legislation in 2022, the SECURE 2.0 Act has passed, with arguably more impactful reform than its predecessor, the SECURE Act of 2019. Download the checklist today to get started.   [post_title] => The Complete Guide to the SECURE 2.0 Act [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-complete-guide-to-the-secure-2-0-act [to_ping] => [pinged] => [post_modified] => 2023-01-06 15:15:35 [post_modified_gmt] => 2023-01-06 21:15:35 [post_content_filtered] => [post_parent] => 0 [guid] => https://pages.carsonhub.wpengine.com/_resource?guidekey=2023-calendar [menu_order] => 0 [post_type] => free-guides [post_mime_type] => [comment_count] => 0 [filter] => raw ) [3] => WP_Post Object ( [ID] => 65898 [post_author] => 90034 [post_date] => 2022-12-09 08:59:28 [post_date_gmt] => 2022-12-09 14:59:28 [post_content] => Get ready to tackle 2023 with this month-by-month financial task list. We've also included important dates so you won't miss key deadlines. Download the checklist today to get started.   [post_title] => 2023 Calendar: Key Tasks & Financial Dates [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => 2023-calendar-key-tasks-financial-dates [to_ping] => [pinged] => [post_modified] => 2022-12-09 09:16:44 [post_modified_gmt] => 2022-12-09 15:16:44 [post_content_filtered] => [post_parent] => 0 [guid] => https://pages.carsonhub.wpengine.com/_resource?guidekey=investing-for-women [menu_order] => 0 [post_type] => free-guides [post_mime_type] => [comment_count] => 0 [filter] => raw ) [4] => WP_Post Object ( [ID] => 65852 [post_author] => 90034 [post_date] => 2022-11-18 08:49:35 [post_date_gmt] => 2022-11-18 14:49:35 [post_content] => Change happens. And whether we carefully plan for these changes, or we are taken by surprise by change, it's how we react to those changes that help dictate if they will ultimately be to our advantage. Whether it's a sudden inheritance, or a divorce settlement that is higher than anticipated, deciding what to do with an unexpected sum of money should happen after emotions have been processed. Download the checklist today to get started.   [post_title] => Investing for Women [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => investing-for-women [to_ping] => [pinged] => [post_modified] => 2022-11-18 09:01:22 [post_modified_gmt] => 2022-11-18 15:01:22 [post_content_filtered] => [post_parent] => 0 [guid] => https://pages.carsonhub.wpengine.com/_resource?guidekey=easy-steps-for-beginning-women-investors [menu_order] => 0 [post_type] => free-guides [post_mime_type] => [comment_count] => 0 [filter] => raw ) ) [post_count] => 5 [current_post] => -1 [in_the_loop] => [post] => WP_Post Object ( [ID] => 66068 [post_author] => 90034 [post_date] => 2023-02-02 13:10:52 [post_date_gmt] => 2023-02-02 19:10:52 [post_content] =>

The following topics are important to keep in mind as you navigate the various individual and employer-sponsored plans that may be available to you.

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Resources

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                    [post_date] => 2023-01-30 11:11:29
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                    [post_content] => Last week the stock market rally continued, with various sectors showing renewed strength. This time a year ago, defensive areas, such as utilities, consumer staples, and health care, were leading. That was a warning sign, and it sure turned out something was wrong. Today small-caps, cyclicals, industrials, and technology are leading. These are more risk-on areas and their strong performance is another sign of underlying health.
  • The stock market’s great start to the year continued last week, which could be a good sign as strong starts can open the door to more gains.
  • Better overall economic data last week continued to increase the chances of avoiding a recession in 2023.
  • The consumer remains in solid shape and will help offset weakness in the housing sector.
  • Price pressures continue to ease, and the inflation outlook remains good.
With only two days to go, the stock market is off to one of its best January starts, with the S&P 500 up close to 6%. This is a great sign for the bulls, as the so-called January Barometer is typically a good indicator for the year. When stocks are green in January, the next 11 months are up close to 12% on average, and the market is higher 86% of the time. When January is down, such as it was in 2022, those averages drop to 2.1% and 60%, respectively. When January is up more than 5%, the returns get even better. The following 11 months are up more than 14% on average, and the market is higher nearly 86% of the time. We wouldn’t suggest blindly investing based on January’s performance, but the returns provide another clue that conditions have changed and higher stock prices in 2023 could be quite likely. More Strong Economic Data The latest GDP growth numbers for the fourth quarter of 2022 came in at 2.9% quarter-over-quarter (annualized rate), which was higher than expectations for a 2.6% reading. This is only slightly below the third quarter growth rate of 3.2%. The first two quarters of last year saw negative growth, so this is a nice bounce back. Over the full year, GDP growth was up just 1% compared to the end of 2021. But this hides the fact that economic growth picked up in the second half of 2022. However, the first-half slowdown leaves the economy about 2.5% below its pre-pandemic trend. The big picture: The economy is more than 5% higher than it was at the end of 2019, which shows how strong the recovery has been despite the early slowdown in 2022. The employment data corroborate this as well. Details Matter GDP is measured as: GDP = Consumption (68%) + Investment (18%) + Government Spending (17%) + Net Exports (-3%) Note that net exports are exports minus imports, and since the U.S. imports more than it exports, net exports tend to be a drag. The table below shows how the various components contributed to GDP growth in the third and fourth quarters. Consumption contributed close to the same amount in both quarters. But in the third quarter the other big driver of GDP growth was net exports, whereas in the fourth quarter it was “change in private inventories.” These are the two most volatile elements of GDP, which is why it helps to look under the hood. The details also help us to consider how the markets and economy will behave in 2023. For that let’s start with the most important category — consumption, which makes up just under 70% of the economy. Consumption Stays Solid, Even as Services Normalize Consumption barely slowed from the third quarter, but there were important differences. Services consumption eased, rising 2.6% in the fourth quarter compared to 3.7% in the third. But that 2.6% pace is well above the 2015-2019 average of 1.9%. The good news is goods spending picked up in the fourth quarter and offset some of the services slowdown. This was almost entirely due to increased auto sales, gas, and grocery purchases — the latter two thanks to lower prices. This is important because we believe this trend will continue into early 2023, especially with auto sales and production picking up. Further good news: Consumers have more money in their pockets due to falling inflation, which will be a tailwind for consumption.   Housing Slowed, Thanks to the Fed The Fed’s aggressive rate hikes had barely any impact on consumption last year. They did have an impact on investment, specifically residential investment, i.e., housing. Higher interest rates led to higher mortgage rates, and that led to a crash in housing activity. Housing pulled economic growth down by about 1.3-1.4 percentage points in the third and fourth quarters. Across 2022, residential investment fell 11%, which is the largest drop since 2009 when it fell 22%. The good news is housing data appear less bad. In fact, mortgage activity has even picked up recently with rates pulling back from peak levels. So, there is sound reason to think housing will be less of a drag in 2023. Nonresidential investment also slowed, which is concerning because it indicates businesses are investing less. However, it turns out the pullback in the fourth quarter was due to businesses spending less on communications equipment, which may simply be a reversal of spending that occurred after the pandemic hit when employees had to shift to their homes.  Government Spending No Longer a Drag Investors forget that government spending makes up about 17% of the economy, and it matters. Over the last two quarters, government spending has picked up, reversing the drag from the prior five quarters. This has helped offset some of the pullback in private investment. It also is in sharp contrast to what happened after the 2008-2009 recession, when government spending was slashed and remained a drag on GDP growth all the way through 2014. Government spending should continue to add to GDP growth in 2023. Congress passed some big spending bills over the past year and half: a $1 trillion infrastructure bill, the Inflation Reduction Act, and a $1.7 trillion government budget, which increased spending significantly. The money will really start to flow into the economy in 2023.   Still No Sign of a Recession As we wrote in our recently released 2023 outlook, we don’t expect a recession in 2023, and the latest data corroborate that story. Our reasoning is simple: Inflation is slowing, and if employment and incomes hold up (as they seem to be doing), real incomes will rise. Considering goods consumption is likely to recover on the back of vehicle purchases, we’re expecting consumption to remain solid. Beyond that, housing should be less of a drag in 2023, especially as the Fed eases rate hikes, which looks likely to happen. So, the peak negative impact of aggressive rate hikes may be behind us. Non-residential investment, especially in structures and equipment, may remain weak. However, recovering auto production, and even aircraft orders, should help U.S. manufacturing. That will be enhanced as the global economy starts to strengthen later in 2023, which should also help exports. GDP growth data may be volatile due to unpredictable inventories and net exports, as we saw in 2022. But the underlying message is there still is no sign of a recession.   This newsletter was written and produced by CWM, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The views stated in this letter are not necessarily the opinion of any other named entity and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. S&P 500 – A capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ 100 Index is a stock index of the 100 largest companies by market capitalization traded on NASDAQ Stock Market. The NASDAQ 100 Index includes publicly-traded companies from most sectors in the global economy, the major exception being financial services. A diversified portfolio does not assure a profit or protect against loss in a declining market. Compliance Case # 01640562 [post_title] => Market Commentary: As Goes January, So Goes the Year [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => market-commentary-as-goes-january-so-goes-the-year [to_ping] => [pinged] => [post_modified] => 2023-01-31 11:39:24 [post_modified_gmt] => 2023-01-31 17:39:24 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?post_type=market-commentary&p=65652 [menu_order] => 0 [post_type] => market-commentary [post_mime_type] => [comment_count] => 0 [filter] => raw ) [1] => WP_Post Object ( [ID] => 65990 [post_author] => 90034 [post_date] => 2023-01-23 10:25:42 [post_date_gmt] => 2023-01-23 16:25:42 [post_content] => Stocks sold off early in the week on disappointing retail sales and industrial production numbers, but they staged a nice bounce on Friday to close out the week. Although some recent data has been disappointing, inflation data continues to show fast improvement, with producer-level inflation coming in lower than expected last week. Additionally, prices-paid components of regional surveys and supply chain data continues to quickly improve. All this matters, as lower inflation opens the door for the Fed to end its aggressive rate-hiking regime (more on this below).
  • Large bounces off midterm-election-year lows are normal, and we expect this to happen again in 2023.
  • The goods sector, both in consumption and production, may be pulling back as the economy continues to normalize.
  • Price pressures continue to ease, and the inflation outlook is good.
  • Rental prices are decelerating, and the supply picture indicates this trend will likely continue into 2023.
Investors should also take comfort in how strong stocks tend to be one year off a midterm-election-year low. As the chart below shows, midterm years tend to see the largest market corrections, down more than 17% on average. Considering stocks fell more than 25% last year, this scenario played out once again. The good news is stocks tend to see a huge bounce one year off the lows, up 32.3% on average and higher a year later every time. Given the S&P 500 bottomed at 3577.03 on October 12, 2022, a 32.3% bounce would bring the index about 1% away from a new all-time high. As hard as it is to believe that could be possible, history indicates new highs in 2023 aren’t as crazy as they sound. Good News for Rental Inflation The Carson Investment Research Team just released its 2023 outlook, which we titled “The Edge of Normal.” The big theme for 2022 was higher-than-expected inflation, which surged to the highest level seen since 1981. This resulted in the Federal Reserve embarking on its most aggressive rate-hike cycle in 40 years, which led to an ugly 2022 for investors, with stocks and bonds falling more than 10%. However, we are optimistic about 2023, mostly because we believe this year may be disinflationary, with several factors that drove inflation higher last year reversing. Amongst the three major drivers of lower inflation in 2023:
  • Gas prices as a deflationary force over the short term;
  • A reversal of core goods (ex. food and energy) prices; and
  • Shelter inflation pulling back in the back half of the year.
The third leg, i.e., shelter inflation, is probably the most important because that will ultimately drive inflation lower and, most importantly, keep it low. That is especially true for core inflation (ex. food and energy), since shelter makes up 40% of the core CPI basket. The good news is market rents are decelerating quite rapidly. Data from Apartment List showed rents have declined for four consecutive months. Rents fell 0.8% in December, which is the largest month-over-month decline ever seen in December. On a year-over-year basis, market rents peaked at 18% at the end of December 2021. The pace was down to under 4% as of last month. Now, as we have discussed in the past, official shelter inflation data is not going to capture this deceleration for another 8-10 months (see here and here). That is because private data reviews only market rents as related to new leases. But renters do not renew their leases every month. So official data considers both existing and new leases, which means there is a lag. On top of that, official data also averages the numbers over several months to smooth them out. But there is even better news on the horizon for shelter inflation. More Rental Supply is Coming The housing data looks awful, thanks to activity cratering amid the surge in mortgage rates. However, this has mostly been concentrated in the single-family housing segment. Dynamics within the multi-family sector have been markedly different. Multi-family units under construction are well outpacing completions and are currently at their highest level since 1973. Typically, construction outpacing completions would be a sign of over-building, as in the mid-2000s amid the housing bubble. This time around, it is due to supply-chain issues and labor shortages. But these are improving. That means a lot more rental units will come onto the market, perhaps by late 2023 and early 2024. We believe that will put even more downward pressure on rental prices. Of course, all of this is going to take a while to show up in the official data, but it further strengthens our view that disinflation is coming, with the largest component of the CPI basket, i.e., shelter, driving that downtrend in late 2023 and even into 2024. Critically, the timing will also likely coincide with a period when the impact of lower goods prices begins to wear off (barring any unexpected shocks). And with shelter inflation on the decline, the Fed will be less likely to argue that disinflationary trends are “transitory.” As a result, the Fed could start to cut rates in response, although this is unlikely until the very end of 2023, if not early 2024 — unless the economy plunges into recession. But that is not our base case currently, for all the reasons we discuss in our outlook.   This newsletter was written and produced by CWM, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The views stated in this letter are not necessarily the opinion of any other named entity and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. S&P 500 – A capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ 100 Index is a stock index of the 100 largest companies by market capitalization traded on NASDAQ Stock Market. The NASDAQ 100 Index includes publicly-traded companies from most sectors in the global economy, the major exception being financial services. A diversified portfolio does not assure a profit or protect against loss in a declining market. Sonu Varghese and Ryan Detrick are non-registered associates of Cetera Advisor Networks. Compliance Case # 01632615 [post_title] => Market Commentary: New Market Highs are Possible in 2023 [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => market-commentary-new-market-highs-are-possible-in-2023 [to_ping] => [pinged] => [post_modified] => 2023-01-23 11:39:22 [post_modified_gmt] => 2023-01-23 17:39:22 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?post_type=market-commentary&p=65619 [menu_order] => 0 [post_type] => market-commentary [post_mime_type] => [comment_count] => 0 [filter] => raw ) [2] => WP_Post Object ( [ID] => 65974 [post_author] => 90034 [post_date] => 2023-01-17 08:35:11 [post_date_gmt] => 2023-01-17 14:35:11 [post_content] => After one of the worst years ever for investors in 2022, we are quite happy to report that 2023 is off to a much better start. The S&P 500 is already up more than 4% for the year and flirting with the round number of 4,000. Optimism that the economy can avoid a recession (more below) and clear signs that inflation has peaked, thus forcing the Fed’s hand on continued interest rate hikes, have led to a great first half of the first month of the year.
  • 2023 is off to a great start for stocks, a welcome change from 2022.
  • Many are calling for a recession in 2023, but there are clues they could be wrong.
  • Various parts of the economy are still growing while the consumer remains quite healthy.
  • Inflation continues to fall and likely will fall quicker than most expect.
China potentially reopening has sparked strong buying in various industrial metals, specifically copper. Copper is reaching new monthly highs, and we don’t think this would be happening if a large global slowdown was coming. Historically, copper has been a good gauge for the global economy, and its strength is yet another clue the situation is different (and better) than 2022. Lastly, strength in the first month of a pre-election year is nothing new. In fact, January is typically the best month in a pre-election year, up a very solid 4.1% on average. The first few months of a pre-election year also tend to be strong based on seasonality, which investors should be open to yet again. Why is Everyone Predicting a Recession? Most outlooks are forecasting a recession in 2023. In contrast, we on the Carson Investment Research Team believe the economy can avoid a recession this year. The recession calls are all predictions and clearly not reflections of where the economy is right now. The NBER’s preferred list of economic indicators, which is used to determine a recession, shows every single indicator grew over the past three months and year-to-date (2022). In fact, four out of the six indicators have exceeded their pre-pandemic growth rates over the past three months (comparing the yellow bars against the dark blue bars). Of course, this is 2022 data and the question is what will happen in 2023. So far this year, inflation has fallen, and with relatively strong wage growth that means higher real incomes. Lower gas prices, lower energy prices (utilities), and lower food prices mean consumers will have more money in their pockets. Just as higher inflation is effectively a tax on income, falling prices are akin to a tax cut. And unless households choose to save this excess income, consumption will stay up. In addition, 38 states have significant tax changes that took effect Jan. 1. As the Tax Foundation notes, most represent net tax reductions, which are the result of a wave of tax cuts over the past two years as state revenues surged and governors/legislatures looked to ease the impact of higher prices on residents. Also, Social Security recipients are slated to receive a cost-of-living adjustment of 8.7% to their incomes in 2023, a function of last year’s high inflation but coming just as inflation starts to pull back. Seniors will get another break from Medicare premiums, which are slated to fall this year. These are all tailwinds for consumption, which makes up 70% of the economy. So, Why the Recession Calls? In short, forecasters are expecting the Fed’s aggressive rate hikes of 2022 to hit the economy in mid-2023 and beyond. The idea is that monetary policy impacts the economy with “long and variable lags,” as Milton Friedman said. Even Fed Chair Jerome Powell and other Fed officials have cited the uncertainty around the lagged impact of their rate hikes as a reason for stepping down the pace in December. They want to wait to see the impact of the 425 bps of rate hikes they implemented last year. However, the reality is monetary policy impacts the economy through financial conditions. Higher interest rates can crimp household demand for mortgages, and tighter credit conditions can curb business spending, including hiring, capital expenditures, and mergers and acquisitions. In fact, because of the Fed’s forward guidance and other commentary (including leaks to the press), financial conditions can tighten well in advance of actual rate hikes, as investors anticipate future Fed actions. The chart below illustrates this point. Across 2022, financial conditions tightened well ahead of the Fed’s rate hikes. This means financial conditions can impact the economy sooner than most people expect. The steep falloff in housing activity is a good example of how tighter financial conditions can be felt almost immediately. Residential investment has been a significant drag on GDP growth since the second quarter of 2022, which is when financial conditions started to really tighten in anticipation of the Fed’s aggressive turn. On an annualized basis, residential investment fell 18% in the second quarter of 2022 and 27% in the third. So, we may be beyond peak negative impact of rate hikes on the economy. Most of the tightening in financial conditions occurred during the first three quarters of 2022. In fact, financial conditions have eased since October (coinciding with a stock market rally). That is even more positive for economic growth, as the drag from tight financial conditions declines. Good News on the Inflation Front We now have a trend! Headline inflation fell 0.1% in December, the slowest pace since May 2020. Inflation has now decelerated to 6.5% year-over-year, quite a pullback from the 9.1% level six months ago. As the chart shows, the big driver has been falling energy prices. In fact, gas prices at the pump fell 9.4% in December and are 1.5% lower than a year ago. Even better news is inflation is falling more broadly now.
  • Food inflation continues to decelerate, rising just 0.3% in December, the slowest pace since March 2021.
  • Core goods prices, excluding food and energy, fell 0.3% in December, the third consecutive month of price declines.
  • A big factor was used car prices, which fell 2.5% in December and are almost 9% lower than a year ago.
  • New vehicle prices fell 0.1%, the first monthly decline in two years and a welcome one.
  • Pandemic-impacted services, such as vehicle rentals and airfares, are also seeing less price pressures now.
  • Housing is keeping pressure on prices. But housing inflation looks to have peaked, and the deceleration in market rents will be reflected in official data eventually.
The Fed will eventually have to acknowledge that price pressures are easing in a broad way, with the obvious implication that they need not maintain policy at such a restrictive level. This is what investors, at least in the bond market, are currently betting will happen, with rate cuts priced for the back half of 2023.   This newsletter was written and produced by CWM, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The views stated in this letter are not necessarily the opinion of any other named entity and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. S&P 500 – A capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ 100 Index is a stock index of the 100 largest companies by market capitalization traded on NASDAQ Stock Market. The NASDAQ 100 Index includes publicly-traded companies from most sectors in the global economy, the major exception being financial services. A diversified portfolio does not assure a profit or protect against loss in a declining market. Compliance Case # 01626019 [post_title] => Market Commentary: Welcome, 2023! [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => market-commentary-welcome-2023 [to_ping] => [pinged] => [post_modified] => 2023-01-17 08:46:16 [post_modified_gmt] => 2023-01-17 14:46:16 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?post_type=market-commentary&p=65601 [menu_order] => 0 [post_type] => market-commentary [post_mime_type] => [comment_count] => 0 [filter] => raw ) [3] => WP_Post Object ( [ID] => 65965 [post_author] => 90034 [post_date] => 2023-01-09 10:19:55 [post_date_gmt] => 2023-01-09 16:19:55 [post_content] => The December payroll report was yet another upside surprise. Monthly payrolls rose by 223,000, above expectations for a 200,000 gain. As Fed Chair Jerome Powell has noted, the economy needs to create about 100,000 jobs a month to keep up with population growth. That’s less than half the current pace.
  • Employment data continues to show strength, but we are also seeing better news on wages.
  • December was historically weak, which has many investors worried. But those concerns could be overblown.
  • Santa Claus came to town, which is one less worry for investors.
The good news from the report is hourly wages rose less than expected. Hourly wages were up only 0.3%, compared with a huge initial 0.6% jump the previous month. The other bit of good news is November’s initial 0.6% rise was revised down to 0.4%. This matters because the Fed needs to see signs that wage growth is slowing, which are finally appearing. Is there farther to go? Or course. But this lowered trend is quite welcome. The jobs report had a Goldilocks feel to it. Just like the fairytale, the data was not too hot nor too cold. The economy creating more than 200,000 jobs but hourly wages slowing down is a pretty good combo at this stage of the cycle. A Bad December Many market watchers have said the stock market’s poor performance in December could be a warning sign. Historically, the last month of the year is quite strong for stocks. But as with much of last year, that wasn’t the case in 2022. In the end, the S&P 500 fell 5.9%, marking one of the worst Decembers ever and the worst since 2018. So, how worried should investors be? It turns out that very poor final months of the year haven’t typically been the warning signs we might expect. December 2018 for instance was the worst December ever for stocks, and they went on to gain nearly 30% in 2019. In fact, the last four times the S&P 500 fell 4% or more in December, the following years were up three times for gains of 38%, 26%, and 29%. There are many worries out there, but a big drop in December apparently shouldn’t be one of them.   Santa Came to Town Let’s end on some good news. Santa Claus did come to town, as the seven days that encompass the well-known Santa Claus rally were indeed higher. Although many people think the Santa Claus rally takes place during the whole month of December, in reality it is the final five days of the year and first two days of the new year. These seven days sported a gain of 0.8%, the seventh consecutive year stocks were higher during this historically strong period. These seven days are higher about 80% of the time, and no period is more likely to be positive. At Carson, we take note when the rally does not occur as this typically is a warning sign, such as it was in 2000 and 2008. The markets present many worries, but the large drop in December and the Santa Claus rally should not be among them.   This newsletter was written and produced by CWM, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The views stated in this letter are not necessarily the opinion of any other named entity and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. S&P 500 – A capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ 100 Index is a stock index of the 100 largest companies by market capitalization traded on NASDAQ Stock Market. The NASDAQ 100 Index includes publicly-traded companies from most sectors in the global economy, the major exception being financial services. A diversified portfolio does not assure a profit or protect against loss in a declining market. Compliance Case # 01616683 [post_title] => Market Commentary: The Goldilocks Jobs Report [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => market-commentary-the-goldilocks-jobs-report [to_ping] => [pinged] => [post_modified] => 2023-01-09 10:58:38 [post_modified_gmt] => 2023-01-09 16:58:38 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?post_type=market-commentary&p=65591 [menu_order] => 0 [post_type] => market-commentary [post_mime_type] => [comment_count] => 0 [filter] => raw ) [4] => WP_Post Object ( [ID] => 65955 [post_author] => 90034 [post_date] => 2023-01-03 12:55:38 [post_date_gmt] => 2023-01-03 18:55:38 [post_content] => The S&P 500 lost 19.4% in 2022, marking the worst year since 2008 and the fourth worst since World War II (behind 1974, 2002, and 2008). The big loser was the NASDAQ, which fell more than 30% thanks to large-cap tech and growth names lagging the overall market significantly. On the flipside, the Dow was down a relatively low 9%, as energy, health care, and staples performed much better. If anything, 2022 reminded investors not to chase leaders or hyped-up products, as money flows to different groups each year and going all in on leading stocks can lead to disappointing results.
  • 2022 was a poor year for investors, as both stocks and bonds generated historically low returns.
  • We anticipate higher returns for both stocks and bonds in 2023, as the economy remains stronger than expected and inflation may fall quickly.
  • There can always be surprises, but those could include good news and better performance in 2023.
As we noted last year, it is quite rare for stocks to fall two years in a row. This happened only during the vicious recession of 1973/1974 and then three years in a row during the tech bubble implosion of the early 2000s. Fortunately, we don’t see similar scenarios in the current environment, so the odds favor a snapback in 2023. As the table below shows, since 1950 the S&P 500 has been up 80% of the time following a down year, generating 15.0% on average. It gets interesting when the index is down more than 10%. The following year has been up 63.6% of the time for an average of only 8.5%. Lastly, it has been down 20% or more only three times, and those have been followed by positive years averaging 27%. Will inflation stay high forever? Despite investors’ concerns, the economy is expected to remain strong in the coming year due to easing inflation and rising incomes. Real personal consumption and real personal incomes have both increased in recent months. Consumption has been supported by rebounding vehicle sales, and rising incomes have provided consumers more disposable income. The Federal Reserve has also acknowledged the deceleration in rent prices and used cars, which make up a significant portion of the core inflation basket. However, the Fed remains concerned about services inflation, particularly in categories such as medical care, insurance, and education, which make up about half of core inflation. This is due to the belief that these costs will ultimately depend on the labor market and wage growth. While wage growth has accelerated in recent months, the Fed remains concerned about its potential impact on inflation and the risk of overtightening and pushing the economy into a recession. The base case is that the economy is strong enough to handle the aggressive rate hikes for now, with the Fed expected to slow the pace of rate increases, which will allow more time for inflation to ease. Why would I want to hold bonds? Bonds are coming off their worst year ever (as measured by the U.S. Aggregate bond fund), having fallen approximately 13%. To put things in perspective, the previous worst year ever was a 3% loss in 1994. Adding insult to injury, bonds also fell two years in a row for the first time ever. Why did bonds do so poorly? Bonds don’t respond well to inflation and higher rates, especially when they come as a big surprise. In September 2021, the Fed was only looking for one 25 basis point hike (0.25%) in all of 2022, so its unexpectedly aggressive rate-hike policy greatly hurt bonds. The good news is higher inflation and potential future rate hikes are now expected. Should inflation fall more in 2023 than anticipated, the Fed might not be as hawkish (aggressive) as many expect. Bonds could gain 3-5% in such a scenario or return to more normal returns. Bonds zig when stocks zag, historically. Some of the worst years for stocks were some of the best for bonds. In 2002 and 2008, stocks fell more than 20% but Treasury bonds gained double digits. We believe 2022 was an anomaly and expect this more normal pattern to return. However, although bonds may offer gains this year, we are overweight stocks relative to bonds and expect stocks to perform better. Lastly, we’ll leave you with this thought. Only twice in the past 50 years — 1994 and 2018 — did both stocks and bonds fall during the same year, according to data from The New York University. 2022 was the third time. But during the following years, stocks gained 34% (1995) and 29% (2019). It’s a small sample size and different environments, no doubt, but it’s a fact worth knowing. Isn’t a recession a near certainty? One of the biggest surprises of 2022 has to be the strength of the consumer. The consumer makes up close to 70% of the economy, so it’s hard to have a recession with a strong consumer. We expect consumption will continue to be strong in the coming year due to a combination of easing inflation and rising incomes. This is supported by the fact that real personal consumption, which adjusts for price changes, has been increasing and is being driven by strong service consumption. Real personal incomes, which also adjust for price changes, have also increased over the past five months. This is allowing consumers to have more disposable income, and they are taking advantage of it. The fact that consumption makes up a significant portion of the economy and that consumers still have excess savings from the pandemic also suggest the economy is not close to a recession. What could be the biggest surprise in 2023? The truth is a lot of investors are hurt and scared. This makes sense after one of the worst years ever for well-diversified portfolios. Nearly everyone is expecting another rough year and particularly a weak first half. One of the biggest surprises could be that we finally start to get some good news. Should inflation come back quickly, as we expect, the Fed may stop its historically aggressive hiking stance. Other potential positives are a weaker U.S. dollar, which helps multi-national companies’ profits, China reopening to stimulate the global economy, a breakthrough in the Ukrainian war, or continued supply chain improvements. All those factors were headwinds in 2022 and contributed significantly to the poor performance of stocks and bonds. Potential worries are always out there, and we aren’t ignoring them, but investors need to know how rare 2022 was and should not necessarily expect it to happen again. We’ll leave with this chart. It turns out that the second year of a new president’s term is quite weak historically for stocks, which sure played out in 2022. But the third year of a new president’s term is historically the best scenario for stocks, as the S&P 500 is up more than 20% on average. We wouldn’t give up all hope just yet on 2023, as the stage could be set for much better times. This newsletter was written and produced by CWM, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The views stated in this letter are not necessarily the opinion of any other named entity and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. S&P 500 – A capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ 100 Index is a stock index of the 100 largest companies by market capitalization traded on NASDAQ Stock Market. The NASDAQ 100 Index includes publicly-traded companies from most sectors in the global economy, the major exception being financial services. A diversified portfolio does not assure a profit or protect against loss in a declining market. Compliance Case # 01610327 [post_title] => Market Commentary: Will stocks ever bounce back? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => market-commentary-will-stocks-ever-bounce-back [to_ping] => [pinged] => [post_modified] => 2023-01-03 13:27:34 [post_modified_gmt] => 2023-01-03 19:27:34 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?post_type=market-commentary&p=65582 [menu_order] => 0 [post_type] => market-commentary [post_mime_type] => [comment_count] => 0 [filter] => raw ) ) [post_count] => 5 [current_post] => -1 [in_the_loop] => [post] => WP_Post Object ( [ID] => 66033 [post_author] => 90034 [post_date] => 2023-01-30 11:11:29 [post_date_gmt] => 2023-01-30 17:11:29 [post_content] => Last week the stock market rally continued, with various sectors showing renewed strength. This time a year ago, defensive areas, such as utilities, consumer staples, and health care, were leading. That was a warning sign, and it sure turned out something was wrong. Today small-caps, cyclicals, industrials, and technology are leading. These are more risk-on areas and their strong performance is another sign of underlying health.
  • The stock market’s great start to the year continued last week, which could be a good sign as strong starts can open the door to more gains.
  • Better overall economic data last week continued to increase the chances of avoiding a recession in 2023.
  • The consumer remains in solid shape and will help offset weakness in the housing sector.
  • Price pressures continue to ease, and the inflation outlook remains good.
With only two days to go, the stock market is off to one of its best January starts, with the S&P 500 up close to 6%. This is a great sign for the bulls, as the so-called January Barometer is typically a good indicator for the year. When stocks are green in January, the next 11 months are up close to 12% on average, and the market is higher 86% of the time. When January is down, such as it was in 2022, those averages drop to 2.1% and 60%, respectively. When January is up more than 5%, the returns get even better. The following 11 months are up more than 14% on average, and the market is higher nearly 86% of the time. We wouldn’t suggest blindly investing based on January’s performance, but the returns provide another clue that conditions have changed and higher stock prices in 2023 could be quite likely. More Strong Economic Data The latest GDP growth numbers for the fourth quarter of 2022 came in at 2.9% quarter-over-quarter (annualized rate), which was higher than expectations for a 2.6% reading. This is only slightly below the third quarter growth rate of 3.2%. The first two quarters of last year saw negative growth, so this is a nice bounce back. Over the full year, GDP growth was up just 1% compared to the end of 2021. But this hides the fact that economic growth picked up in the second half of 2022. However, the first-half slowdown leaves the economy about 2.5% below its pre-pandemic trend. The big picture: The economy is more than 5% higher than it was at the end of 2019, which shows how strong the recovery has been despite the early slowdown in 2022. The employment data corroborate this as well. Details Matter GDP is measured as: GDP = Consumption (68%) + Investment (18%) + Government Spending (17%) + Net Exports (-3%) Note that net exports are exports minus imports, and since the U.S. imports more than it exports, net exports tend to be a drag. The table below shows how the various components contributed to GDP growth in the third and fourth quarters. Consumption contributed close to the same amount in both quarters. But in the third quarter the other big driver of GDP growth was net exports, whereas in the fourth quarter it was “change in private inventories.” These are the two most volatile elements of GDP, which is why it helps to look under the hood. The details also help us to consider how the markets and economy will behave in 2023. For that let’s start with the most important category — consumption, which makes up just under 70% of the economy. Consumption Stays Solid, Even as Services Normalize Consumption barely slowed from the third quarter, but there were important differences. Services consumption eased, rising 2.6% in the fourth quarter compared to 3.7% in the third. But that 2.6% pace is well above the 2015-2019 average of 1.9%. The good news is goods spending picked up in the fourth quarter and offset some of the services slowdown. This was almost entirely due to increased auto sales, gas, and grocery purchases — the latter two thanks to lower prices. This is important because we believe this trend will continue into early 2023, especially with auto sales and production picking up. Further good news: Consumers have more money in their pockets due to falling inflation, which will be a tailwind for consumption.   Housing Slowed, Thanks to the Fed The Fed’s aggressive rate hikes had barely any impact on consumption last year. They did have an impact on investment, specifically residential investment, i.e., housing. Higher interest rates led to higher mortgage rates, and that led to a crash in housing activity. Housing pulled economic growth down by about 1.3-1.4 percentage points in the third and fourth quarters. Across 2022, residential investment fell 11%, which is the largest drop since 2009 when it fell 22%. The good news is housing data appear less bad. In fact, mortgage activity has even picked up recently with rates pulling back from peak levels. So, there is sound reason to think housing will be less of a drag in 2023. Nonresidential investment also slowed, which is concerning because it indicates businesses are investing less. However, it turns out the pullback in the fourth quarter was due to businesses spending less on communications equipment, which may simply be a reversal of spending that occurred after the pandemic hit when employees had to shift to their homes.  Government Spending No Longer a Drag Investors forget that government spending makes up about 17% of the economy, and it matters. Over the last two quarters, government spending has picked up, reversing the drag from the prior five quarters. This has helped offset some of the pullback in private investment. It also is in sharp contrast to what happened after the 2008-2009 recession, when government spending was slashed and remained a drag on GDP growth all the way through 2014. Government spending should continue to add to GDP growth in 2023. Congress passed some big spending bills over the past year and half: a $1 trillion infrastructure bill, the Inflation Reduction Act, and a $1.7 trillion government budget, which increased spending significantly. The money will really start to flow into the economy in 2023.   Still No Sign of a Recession As we wrote in our recently released 2023 outlook, we don’t expect a recession in 2023, and the latest data corroborate that story. Our reasoning is simple: Inflation is slowing, and if employment and incomes hold up (as they seem to be doing), real incomes will rise. Considering goods consumption is likely to recover on the back of vehicle purchases, we’re expecting consumption to remain solid. Beyond that, housing should be less of a drag in 2023, especially as the Fed eases rate hikes, which looks likely to happen. So, the peak negative impact of aggressive rate hikes may be behind us. Non-residential investment, especially in structures and equipment, may remain weak. However, recovering auto production, and even aircraft orders, should help U.S. manufacturing. That will be enhanced as the global economy starts to strengthen later in 2023, which should also help exports. GDP growth data may be volatile due to unpredictable inventories and net exports, as we saw in 2022. But the underlying message is there still is no sign of a recession.   This newsletter was written and produced by CWM, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The views stated in this letter are not necessarily the opinion of any other named entity and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. S&P 500 – A capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ 100 Index is a stock index of the 100 largest companies by market capitalization traded on NASDAQ Stock Market. The NASDAQ 100 Index includes publicly-traded companies from most sectors in the global economy, the major exception being financial services. A diversified portfolio does not assure a profit or protect against loss in a declining market. 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Market Commentary

Market Commentary

Market Commentary: As Goes January, So Goes the Year

Last week the stock market rally continued, with various sectors showing renewed strength. This time a year ago, defensive areas, such as utilities, consumer staples, and health care, were leading. That was a warning sign, and it sure turned out something was wrong. Today small-caps, cyclic …
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                    [post_content] => After a year riddled with market volatility, it’s a good idea to get some market outlook insights from a respected thought leader, Carson Group’s Chief Market Strategist Ryan Detrick. 

Watch Detrick’s Carson's 2023 Market Outlook webinar, now available on-demand.  
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                    [post_content] => Carson Partners’ Ryan Detrick shares key events we saw in the past quarter and how we think they’ll affect markets in 2023. Contact us to speak with a financial advisor.

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Now, its sequel – dubbed SECURE Act 2.0 – has just passed as part of the 2023 budget.    [post_title] => How SECURE Act 2.0 Shifts the Retirement Planning Landscape  [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => everything-you-need-to-know-about-rmds-2-2-2-2-2-3-2-2-2 [to_ping] => [pinged] => [post_modified] => 2023-01-09 13:58:34 [post_modified_gmt] => 2023-01-09 19:58:34 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?post_type=videos&p=65597 [menu_order] => 0 [post_type] => videos [post_mime_type] => [comment_count] => 0 [filter] => raw ) [3] => WP_Post Object ( [ID] => 65928 [post_author] => 90034 [post_date] => 2022-12-20 07:45:23 [post_date_gmt] => 2022-12-20 13:45:23 [post_content] => Nobody knows with complete certainty what 2023 will bring for your finances, but we have some educated guesses. Learn about how 2022 events might impact your 2023 in our on-demand webinar A Look Ahead to 2023 with Carson’s Senior Wealth Planner Kevin Oleszewski CFP®, MST, EA.    [post_title] => A Look Ahead to 2023 [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => everything-you-need-to-know-about-rmds-2-2-2-2-2-3-2-2 [to_ping] => [pinged] => [post_modified] => 2022-12-20 08:16:55 [post_modified_gmt] => 2022-12-20 14:16:55 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?post_type=videos&p=65555 [menu_order] => 0 [post_type] => videos [post_mime_type] => [comment_count] => 0 [filter] => raw ) [4] => WP_Post Object ( [ID] => 65849 [post_author] => 90034 [post_date] => 2022-11-18 08:34:18 [post_date_gmt] => 2022-11-18 14:34:18 [post_content] => You probably have questions on how the markets will be affected by the midterm elections. Will you feel policy changes in your wallet?    [post_title] => Markets, Policy & Elections [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => everything-you-need-to-know-about-rmds-2-2-2-2-2-3-2 [to_ping] => [pinged] => [post_modified] => 2022-11-18 08:46:25 [post_modified_gmt] => 2022-11-18 14:46:25 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?post_type=videos&p=65474 [menu_order] => 0 [post_type] => videos [post_mime_type] => [comment_count] => 0 [filter] => raw ) ) [post_count] => 5 [current_post] => -1 [in_the_loop] => [post] => WP_Post Object ( [ID] => 66023 [post_author] => 90034 [post_date] => 2023-01-27 12:56:44 [post_date_gmt] => 2023-01-27 18:56:44 [post_content] => After a year riddled with market volatility, it’s a good idea to get some market outlook insights from a respected thought leader, Carson Group’s Chief Market Strategist Ryan Detrick.  Watch Detrick’s Carson's 2023 Market Outlook webinar, now available on-demand.   [post_title] => 2023 Market Outlook Webinar [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => everything-you-need-to-know-about-rmds-2-2-2-2-2-3-2-2-2-2 [to_ping] => [pinged] => [post_modified] => 2023-01-27 13:10:17 [post_modified_gmt] => 2023-01-27 19:10:17 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?post_type=videos&p=65650 [menu_order] => 0 [post_type] => videos [post_mime_type] => [comment_count] => 0 [filter] => raw ) [comment_count] => 0 [current_comment] => -1 [found_posts] => 84 [max_num_pages] => 17 [max_num_comment_pages] => 0 [is_single] => [is_preview] => [is_page] => [is_archive] => [is_date] => [is_year] => [is_month] => [is_day] => [is_time] => [is_author] => [is_category] => [is_tag] => [is_tax] => [is_search] => [is_feed] => [is_comment_feed] => [is_trackback] => [is_home] => 1 [is_privacy_policy] => [is_404] => [is_embed] => [is_paged] => [is_admin] => [is_attachment] => [is_singular] => [is_robots] => [is_favicon] => [is_posts_page] => [is_post_type_archive] => [query_vars_hash:WP_Query:private] => 96457fda42cbc90be6c2c8ccb3d67839 [query_vars_changed:WP_Query:private] => [thumbnails_cached] => [allow_query_attachment_by_filename:protected] => [stopwords:WP_Query:private] => [compat_fields:WP_Query:private] => Array ( [0] => query_vars_hash [1] => query_vars_changed ) [compat_methods:WP_Query:private] => Array ( [0] => init_query_flags [1] => parse_tax_query ) [tribe_is_event] => [tribe_is_multi_posttype] => [tribe_is_event_category] => [tribe_is_event_venue] => [tribe_is_event_organizer] => [tribe_is_event_query] => [tribe_is_past] => )

Videos

Videos

2023 Market Outlook Webinar

After a year riddled with market volatility, it’s a good idea to get some market outlook insights from a respected thought leader, Carson Group’s Chief Market Strategist Ryan Detrick.  Watch Detrick’s Carson’s 2023 Market Outlook webinar, now available on-demand.  
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                    [post_content] => By Erin Wood, Senior Vice President, Financial Planning and Advanced Solutions

Just a few years ago, Rose retired with a decent-sized 401(k). With some careful budgeting and a part-time job, her retirement finances were on track. Rose was looking forward to traveling, reigniting her passion for photography and spending time with her son and her grandkids.

The pandemic changed everything. Her son contracted COVID-19 in the early days of the pandemic. His health deteriorated quickly and he died at only 35 years old. He didn’t have life insurance. A gig worker without a 401(k), he had very minimal retirement savings.

Rose’s grandchildren, ages 2 and 6, joined the more than 140,000 U.S. children under the age of 18 who lost their primary or secondary caregiver due to the pandemic from April 2020 through June 2021. That’s approximately one out of every 450 children under age 18 in the United States.

Rose’s ex-daughter-in-law battles drug addiction and had lost custody of the kids during the divorce, so Rose became the children’s primary caregiver. She quickly discovered that caring for young children as an older adult is more physically challenging than when she raised her son, so she made the difficult decision to leave her part-time job to have the energy to care for her active grandchildren. She wants to do everything for these kids who have lost so much — but it puts her financial security at risk.

Sadly, she is far from alone.

Read the full article
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                    [post_content] => By: Erin Wood, CFP®, CRPC®, FBS®, Senior Vice President, Financial Planning, Carson Group

 

Laura and Caroline are in their late 50s. Friends since meeting at a playgroup for their toddlers, both were in long-term, seemingly happy marriages. Laura married her high school sweetheart right after they graduated from college and worked as an RN while her husband attended medical school. When their first child was born, Laura decided to become a stay-at-home parent. She just celebrated sending her last child off to college and was looking forward to enjoying an empty nest with her husband.

Already established in her career as an accountant for a large insurance firm, Caroline married a bit later, at 33. Today, she’s a financial controller for the same firm. Her spouse owns his own landscaping business. Caroline is the high-wage earner in the family.

Unfortunately, both women are now surprised to be facing a “gray” divorce: a divorce involving couples in their 50s or older. Each will need to make some tough choices as they deal with the emotional devastation of unraveling a long-term marriage. Although my focus as a financial planner is to help my clients find their financial footing during and after divorce, I also encourage clients to build a strong network of family and friends as well as a therapist or clergy person to offer critical emotional support during this time.

Read full article on Kiplinger.com

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Roth conversions can be a powerful tax and retirement planning technique. The idea behind most Roth conversions is to take money from an IRA and convert it to a Roth IRA. Essentially, you’re paying taxes today instead of paying taxes in the future.

The Tax Cut and Jobs Act lowered taxes for many Americans and with the SECURE Act Roth IRAs became even more powerful as an estate planning vehicle to minimize taxes, so it’s a convenient time to take advantage of Roth conversions. However, Roth conversions can come with some issues. Before you engage in one, be aware of these common problems as it can be hard to undo the transaction.

Conversions After 72

IRAs and Roth IRAs are both retirement accounts. It’s easy to assume Roth Conversions are best suited for retirement, too. However, waiting too long to do conversions can actually make the entire process more challenging. If you own an IRA, it’s subject to required minimum distribution rules once you turn 72, as long as you had not already reached age 70.5 by the end of 2019. The government wants you to start withdrawing money from your IRA each year and pay taxes on the tax-deferred money. However, Roth IRAs aren’t subject to RMDs at age 72. If you don’t need the money from your RMD to support your retirement spending, you might think, “I should convert this to a Roth IRA so it can stay in a tax-deferred account longer.” Unfortunately, that won’t work. You can’t roll over or convert RMDs for a given year. So, if you owe a RMD in 2020, you need to take it and you cannot convert it to a Roth IRA. Despite the fact you can’t convert an RMD, it doesn’t mean you can’t do Roth conversions after age 72. However, you need to make sure you get your RMD out before you do a conversion. Your first distributions from an IRA after 72 will be treated as RMD money first. This means, if you want to convert $10,000 from your IRA, but you also owe an $8,000 RMD for the year, you need to take the full $8,000 out before you do a conversion. Full article on Forbes   [post_title] => 3 Roth Conversion Traps To Avoid After The SECURE Act [post_excerpt] => Roth conversions can be a powerful tax and retirement planning technique. The idea behind most Roth conversions is to take money from an IRA and convert it to a Roth IRA. Essentially, you’re paying taxes today instead of paying taxes in the future. [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => 3-roth-conversion-traps-to-avoid [to_ping] => [pinged] => [post_modified] => 2020-02-28 16:01:10 [post_modified_gmt] => 2020-02-28 22:01:10 [post_content_filtered] => [post_parent] => 0 [guid] => https://divi-partner-template.carsonwealth.com/?post_type=news&p=53316 [menu_order] => 0 [post_type] => news [post_mime_type] => [comment_count] => 0 [filter] => raw ) [3] => WP_Post Object ( [ID] => 51325 [post_author] => 6008 [post_date] => 2019-12-06 10:26:33 [post_date_gmt] => 2019-12-06 16:26:33 [post_content] => By Jamie Hopkins People plan on having a good day, a good year, a good retirement and a good life. But why stop there? Why not plan for a good end of life, too? End of life or estate planning is about getting plans in place to manage risks at the end of your life and beyond. And while it might be uncomfortable to discuss or plan for the end, everyone knows that no one will live forever. Estate planning and end of life planning are about taking control of your situation. Death and long-term care later in life might be hard to fathom right now, but we can’t put off planning out of fear of the unknown or because it’s unpleasant. Sometimes it takes a significant event like a health scare to shake us from our procrastination. Don’t wait for life to happen to you, though. Full article on Kiplinger [post_title] => 10 Common Estate Planning Mistakes (and How to Avoid Them) [post_excerpt] => Estate planning and end of life planning are about taking control of your situation. Death and long-term care later in life might be hard to fathom right now, but we can’t put off planning out of fear of the unknown or because it’s unpleasant. Don’t wait for life to happen to you, though. [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => 10-common-estate-planning-mistakes-and-how-to-avoid-them [to_ping] => [pinged] => [post_modified] => 2020-02-28 16:02:24 [post_modified_gmt] => 2020-02-28 22:02:24 [post_content_filtered] => [post_parent] => 0 [guid] => https://divi-partner-template.carsonwealth.com/?post_type=news&p=51325 [menu_order] => 0 [post_type] => news [post_mime_type] => [comment_count] => 0 [filter] => raw ) [4] => WP_Post Object ( [ID] => 63308 [post_author] => 273 [post_date] => 2019-11-11 16:27:38 [post_date_gmt] => 2019-11-11 21:27:38 [post_content] => By Jamie Hopkins

Everyone’s heard the stories of celebrities who died without a proper estate plan in place. It’s been a hot topic in the last few years with Prince and Aretha Franklin serving as unfortunate faces of the phenomenon. But it’s not just freewheeling entertainers. Abraham Lincoln – a lawyer by trade – didn’t have one either, which leads me to say something you’ve probably never heard anyone say: don’t be like Abraham Lincoln.

Most people want to plan for a good life and a good retirement, so why not plan for a good end of life, too? Let’s look at four ways you can refine your estate plan, protect your assets and create a level of control and certainty for your loved ones.

1. Review Beneficiary Designations

Many accounts can pass to heirs and loved ones without having to go through the sometimes costly and time-consuming process of probate. For instance, life insurance contracts, 401(k)s and IRAs can be transferred through beneficiary designations – meaning you determine who you want to inherit your accounts after you die by filing out a beneficiary form. You can often name successors or backup beneficiaries, and even split up accounts by dollar amount or percentages between beneficiaries with these forms. Full article on Forbes [post_title] => 4 Ways To Improve Your Estate Plan [post_excerpt] => Most people want to plan for a good life and a good retirement, so why not plan for a good end of life, too? Let’s look at four ways you can refine your estate plan, protect your assets and create a level of control and certainty for your loved ones. [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => 4-ways-to-improve-your-estate-plan [to_ping] => [pinged] => [post_modified] => 2020-02-28 17:02:59 [post_modified_gmt] => 2020-02-28 22:02:59 [post_content_filtered] => [post_parent] => 0 [guid] => https://pangeawealth1.carsonwealth.com/insights/news/4-ways-to-improve-your-estate-plan/ [menu_order] => 0 [post_type] => news [post_mime_type] => [comment_count] => 0 [filter] => raw ) ) [post_count] => 5 [current_post] => -1 [in_the_loop] => [post] => WP_Post Object ( [ID] => 65183 [post_author] => 90034 [post_date] => 2022-05-26 08:18:44 [post_date_gmt] => 2022-05-26 13:18:44 [post_content] => By Erin Wood, Senior Vice President, Financial Planning and Advanced Solutions Just a few years ago, Rose retired with a decent-sized 401(k). With some careful budgeting and a part-time job, her retirement finances were on track. Rose was looking forward to traveling, reigniting her passion for photography and spending time with her son and her grandkids. The pandemic changed everything. Her son contracted COVID-19 in the early days of the pandemic. His health deteriorated quickly and he died at only 35 years old. He didn’t have life insurance. A gig worker without a 401(k), he had very minimal retirement savings. Rose’s grandchildren, ages 2 and 6, joined the more than 140,000 U.S. children under the age of 18 who lost their primary or secondary caregiver due to the pandemic from April 2020 through June 2021. That’s approximately one out of every 450 children under age 18 in the United States. Rose’s ex-daughter-in-law battles drug addiction and had lost custody of the kids during the divorce, so Rose became the children’s primary caregiver. She quickly discovered that caring for young children as an older adult is more physically challenging than when she raised her son, so she made the difficult decision to leave her part-time job to have the energy to care for her active grandchildren. She wants to do everything for these kids who have lost so much — but it puts her financial security at risk. Sadly, she is far from alone. Read the full article [post_title] => COVID’s Financial Toll Isn’t What You Think [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => covids-financial-toll-isnt-what-you-think [to_ping] => [pinged] => [post_modified] => 2022-05-26 08:30:40 [post_modified_gmt] => 2022-05-26 13:30:40 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?post_type=news&p=64940 [menu_order] => 0 [post_type] => news [post_mime_type] => [comment_count] => 0 [filter] => raw ) [comment_count] => 0 [current_comment] => -1 [found_posts] => 6 [max_num_pages] => 2 [max_num_comment_pages] => 0 [is_single] => [is_preview] => [is_page] => [is_archive] => [is_date] => [is_year] => [is_month] => [is_day] => [is_time] => [is_author] => [is_category] => [is_tag] => [is_tax] => [is_search] => [is_feed] => [is_comment_feed] => [is_trackback] => [is_home] => 1 [is_privacy_policy] => [is_404] => [is_embed] => [is_paged] => [is_admin] => [is_attachment] => [is_singular] => [is_robots] => [is_favicon] => [is_posts_page] => [is_post_type_archive] => [query_vars_hash:WP_Query:private] => 8bbea74eca9b0e937ac286f0d22d32a8 [query_vars_changed:WP_Query:private] => [thumbnails_cached] => [allow_query_attachment_by_filename:protected] => [stopwords:WP_Query:private] => [compat_fields:WP_Query:private] => Array ( [0] => query_vars_hash [1] => query_vars_changed ) [compat_methods:WP_Query:private] => Array ( [0] => init_query_flags [1] => parse_tax_query ) [tribe_is_event] => [tribe_is_multi_posttype] => [tribe_is_event_category] => [tribe_is_event_venue] => [tribe_is_event_organizer] => [tribe_is_event_query] => [tribe_is_past] => )

In the News

In the News

COVID’s Financial Toll Isn’t What You Think

By Erin Wood, Senior Vice President, Financial Planning and Advanced Solutions Just a few years ago, Rose retired with a decent-sized 401(k). With some careful budgeting and a part-time job, her retirement finances were on track. Rose was looking forward to traveling, reigniting her passion …
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