Planning Updates for 2020
Happy New Year! Welcome back to the weekly Market Update. With some people still on vacation, we expect average to below average trading volume on the S&P 500. As of Thursday’s close, we have only had one trading day in 2020, but it was a positive one with the tech heavy NASDAQ leading the broader indexes, up 1.33%, followed by the Dow Jones Industrial average posting a gain of 1.16% and the S&P 500 increasing a respectable .84%.
Next week we will be writing our quarterly commentary in which we will recap 2019 and provide our outlook on 2020. We will discuss where we see opportunity and how we will tactically allocate our strategies to capitalize on the investment environment. However, today we will highlight some planning items that have changed in 2020 and are equally as important as proper asset allocation and security selection.
For 2020, the IRA and Roth contribution limits remain the same as last year, $6,000 for individuals under age 50 and $7,000 for those 50 and over. We are not surprised to see the limits have remained the same because it increased in 2019 after remaining constant since 2013.
For those putting money away in an employer retirement plan, such as a 401(k) or 403(b), there is good news. The limits increased in 2020 to $19,500 for people under age 50 and $26,000 for individuals 50 and older.
The new law—the Secure Act that was passed by congress and signed into law by President Trump December 20—will provide many planning opportunities, such as making Roth conversions more attractive for some situations. Jeremy Kisner, Director of Financial Planning, at Surevest wrote a great summary of how this law will affect people with retirement accounts. Click here to read what Jeremy wrote about The Secure Act.
For a list of other tax changes in 2020, click here for our tax reference guide.