A Brief Market Update
Markets dropped sharply at the beginning of the year, and that led to the predictable spate of alarmist stories in the financial press. Nevertheless, as we wrote at the time, it appeared unlikely that we were witnessing the onset of a a bear market. A bear market tends to be driven either by a recession, significant global turmoil or excessive Fed tightening and none of those conditions were apparent at the outset of this year.

Fast forward a few months and the market has recovered as investors apparently shook off their fears of an impending recession. Furthermore, in the wake of their most recent meeting, the Fed took a more dovish tone with regards to raising interest rates, making excessive tightening less likely. The markets have responded positively as large cap U.S. stocks and bonds as well as emerging equities are all positive for the year. Oil has also rebounded sharply, and the price recovery may help drive higher corporate profits for the substantial share of the S&P 500 companies that were negatively impacted by the initial downturn.

Taking a longer term view, we are likely in the late stages of the economic expansion, and if that is the case, then we will likely experience a bear market in the nearer term. I’ll provide a good deal more detail in next month’s quarterly commentary, but a key takeaway from this most recent bout of market weakness is that ignoring the noise and focusing on market and economic fundamentals can help investors avoid emotion-driven selling.

A Review of Being Mortal
I initially wanted to read Being Mortal both because I knew Atul Gawande was an excellent writer and because I was particularly interested in the section of the book about long term care. We often help clients with decisions around this topic, and I thought any information about the experience of long term care – as opposed to just the financial implications – would help us provide better, more informed advice.

The information on long term care was as helpful as I had hoped, and overall the book exceeded my expectations even if it was, at times, difficult reading. Gawande’s aim is to explore how medical care in this country misses the mark in terms of improving the quality of life for those at or near the end of their lives. To do this, he interweaves the history of healthcare in the U.S. with often poignant stories of individuals who are seeking care as they near the end of their lives. The confluence of the two strands shows how the system we now have often fails to meet the needs of patients in focusing on simply prolonging life without considering the quality.

The book ultimately succeeds on two levels. First, it shows the systemic inadequacies of our healthcare system, and it suggests some proven remedies. The second level focuses far more on the individual, and specifically on what becomes important as we near life’s end. It was that knowledge, whether for ourselves or to help understand what a loved one is facing, that I found invaluable.

April Deadlines
With the possible exception of December 31st, no other month has quite as many financial deadlines for individuals than April. April 15th is, of course, the most well-known date, but many types of retirement plans have deadlines that are tied to the tax filing date. Additionally, for IRA owners who turned 70.5 in the preceding year, there is a deadline to take required minimum distributions. Finally, this April is unique in that recent changes to social security have created end of month deadlines for this year only. It can get confusing, but here are some details that should help you identify deadlines and determine whether or not they impact you.

Retirement Plans
Roth and Traditional IRA Contributions – IRA contributions need to be made by the tax filing deadline, which is typically April 15th. Note that filing extensions does not extend the date by which your contribution can be made beyond the standard filing deadline.

401k Contributions – all 401k contributions that are made via employee deferral must be deducted from the employee’s paycheck in the calendar year in question, but employer contributions can be made by the employer’s tax filing deadline including extensions.

SEP IRA Contributions – SEP contributions are due by the employer’s tax filing deadline, again including extensions.

Required Minimum Distributions
The government requires that owners of IRAs (and, in some circumstances, retirement plans) being taking withdrawals from their IRAs in the year after the year in which they turn 70.5. The specific deadline is April 1st. However, in most instances we recommend clients take the required minimum distribution in the year in which they turn 70.5 to avoid having to take two withdrawals in the subsequent year, thereby driving up income taxes.

Social Security
2016 is unique in that there is a social security filing deadline related to recent legislation which curtails the use of certain claiming strategies. The strategies and the related deadlines and whom they impact are a bit detailed and we covered those details in December’s newsletter which you’ll find here.