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Year-end 2015

Year-end Reminders

As the Holiday season and year-end are upon us, we wanted to bring you up-to-date on some topics to be aware of.

This is the time to enroll in Medicare (if you will be 65 next year) as well as review your private health insurance (if you are not in a group plan). Here is a link to give you more information on helpful details for Medicare.

Congress has eliminated some of the Social Security strategies that we have encouraged those who qualify to take advantage of. It gave many the potential to add thousands if not hundreds of thousands of dollars to their Social Security income depending on life expectancy. We have sent out notices to those we believe are affected. Specifically the "file and suspend" will go away next year. You have until May of 2016 to take advantage of that strategy. Check out this helpful link. If you have any further questions feel free to give us a call.

Year-end 2015

  • Be sure to maximize your 401(k) plans by year-end.
  • Long-term capital gains may be high this year for many mutual fund companies. Fund companies must distribute to shareholders realized gains from portfolio activity during the fund year. Those can increase during periods of volatility (like earlier this year) when many sell their shares. You can offset gains with tax losses if they are available. Contact us if you want to review losses.
  • Be sure to take your RMD by 12/31 if you are 70.5. Congress has again procrastinated on making a permanent change allowing charitable contributions from IRAs to qualify for your RMD. In the past, we did not know until very close to the end of the year if that was allowable which we anticipate may happen again this year. If this is a strategy you would like to take advantage of, please let us know sooner than later so we can plan accordingly.
  • Contributions of appreciated stock to qualified charities can be a very tax efficient way to fulfill your philanthropic goals as well as avoiding capital gains and potentially receiving a tax deduction. Donor-advised funds allow you to get a deduction now and decide where the gift goes later. There are many tax advantaged ways to give to the charity of your choice. We can help you.

Market Update

The markets have been volatile and most asset classes have been flat or negative for the year (source). It has been hard to find much opportunity. However, a diversified portfolio has held up reasonably well despite disturbing events overseas. We expected a larger pullback than what we saw in the third quarter, but we may have seen the lows for the year. The Fed still indicates a December interest rate increase, but more important than the timing of when they start will be what the path looks like from there. Slow, gradual rate increases to normalize interest rates would be preferred.

Mid-month, all eyes will be on the Federal Open Market Committee when they meet on December 15 - 16. The highly expected announcement will likely raise the Fed Funds rate for the first time since reaching the zero bound on December 16, 2008. The last time the Fed actually raised Fed Funds was on June 29, 2006, the final 25 basis point step in the then unprecedented 17 step, 425 basis point move from 1.00% in June 2004 to 5.25% in June 2006. If the Fed finally manages a liftoff, and we expect they will, don't expect to see much additional action for most of 2016, a move or two of 25 additional basis points, but not much more. 2016 looks nothing like 2004.

We remain focused on the markets, global events, taxes and your portfolios. Please let us know if we can help you in your year-end planning.

We wish you a very peaceful and joyful holiday season with your family and loved ones and look forward to a happy and healthy 2016!

Best Regards,

Sherri

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