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Tag: COVID-19

Am I Going to be Okay?

Am I Going to be Okay?

Worry is defined as a state of anxiety and uncertainty over actual or potential problems. That’s the noun form of the word. I’d like to focus on the verb form, if I might, which is defined: to give way to anxiety or unease, to allow one’s mind to dwell on difficulty or troubles. Anybody resemble that remark, as they say? [Billy raises his hand].  This may or may not come as a surprise, but my worry typically has little to do with the stock market.  

I worry more about things I’m less familiar with. How, for example, can I ensure my family remains safe through a global pandemic? Not only for their physical well-being, but from the effects of isolation from friends and teammates to media-driven fear and hyperbole.  Wading through the psychological make up of teenagers can be challenging enough let alone during the last two years! Well, I’m still not sure how to address all of that, but my belief is that my family and my children are here, in this community, in the midst of all that’s going on, at the precise time they were appointed to be. And sometimes, when you don’t have all the answers, you seek wise counsel in conversation with a friend or mentor, or maybe in the pages of a book. (Or in my case, you do both…and often.)

And then you keep moving.

How are you faring through all of this? A recent study* by the American Psychiatric Association suggests that 40% of Americans were anxious about becoming seriously ill or dying from coronavirus and 62% were worried about the same for their loved ones. Bad thing about worrying is that it’s a slippery slope – things you may not otherwise worry about now have you on edge.  Ordinary and routine events may now become sources for worry. And left unchecked, worry can – for some – manifest physically and affect the way you feel even to the point where you live in a constant state of fear and dread.  All of this leaving us wrestling with this question:

Am I going to be okay?

As many of you can attest, numbers aren’t the only things CapSouth pays attention to. And quite frankly, they’re not even the most important.  Sure, there are certain numbers that are likely to be part of the conversation. Returns, Probability of Success, for some, 33-18, for others.  But out of context, they’re only numbers. What gives meaning to those numbers is the life you want to live and how you’re planning to get there. Or as you’ve heard us say, living your one best financial life. A lot of what’s going on in the world today I don’t even have a name for. At least not one suitable for this article. Quite a bit of what we see, read, and hear these days is certainly good for news stories. (Not that I always believe it’s newsworthy. That’s a topic for another day.) They do, however, generate viewership, readership and advertising.  And so, the machine churns. And in the process, the narrative causes uncertainty, concern, and for some, full-fledged worry.  And so that machine churns, also.  

As it relates to your financial plan, to your one best financial life, allow us to join the conversation if you feel yourself slipping toward worry. Is it okay to be concerned? Of course, and it’s prudent. Your retirement assets may likely be the single largest asset you’ll ever have.  Is it okay to be uncertain? Of course, and it’s unavoidable at times. The news cycles have and will forever generate short-term market movement.  We see this play out daily.  The market’s going to go up, sideways, or down.  Whether you watch it on TV or on your phone, or maybe choose to go for a walk with a loved one instead – it’s going to happen. All of which, quite likely, in the same day. That said, please allow us to help you filter through the noise and help keep it in context.  Not all of it matters, and you don’t have to go through it alone.

There are some pretty sharp individuals you have working on your behalf here at CapSouth. I’ve spent ten years of my life working with them. People I trust and depend on greatly. Not just because of how smart they may be or how hard they work for the benefit our clients, but because of the type of individuals they are. I may be preaching to the choir as some of you have been around CapSouth longer than I have. One of our values is to treat others the way we want to be treated. Maybe it’s a clarification of a news event? Maybe it’s a recap of your estate plan?  Or maybe it’s just having someone who’ll listen.

We’re here. How can we help?  Click here to Connect With Us

To discuss this article further or to learn more about CapSouth Wealth Management, visit our website at www.capsouthwm.com or call 800.929.1001 to schedule an appointment to speak with an advisor.

By:  Billy McCarthy, Wealth Manager

*New Poll: COVID-19 Impacting Mental Well-Being: Americans Feeling Anxious, Especially for Loved Ones; Older Adults are Less Anxious

American Psychiatric Association, May 25, 2020

https://www.psychiatry.org/newsroom/news-releases/new-poll-covid-19-impacting-mental-well-being-americans-feeling-anxious-especially-for-loved-ones-older-adults-are-less-anxious.

Investment advisory services are offered through CapSouth Partners, Inc, dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable. CapSouth does not guarantee the accuracy or completeness of the information. CapSouth does not offer tax, accounting, or legal advice. Consult your tax or legal advisors for all issues that may have tax or legal consequences. This information has been prepared solely for informational purposes, is general in nature and is not intended as specific advice. This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). CapSouth makes no representations whatsoever regarding any third party content/sites. Linking to these third party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

How CapSouth Advisors are Responding to the Bear Market & Recent Legislation

How CapSouth Advisors are Responding to the Bear Market & Recent Legislation – April 13, 2020

You can tell a lot about your broker or advisor from the actions they take (or don’t take) in market disruptions. The current period, with steep market declines, extreme volatility, pandemic fear, and emergency legislation packages certainly qualifies as a market disruption. We believe good advisors and brokers excel in communicating with clients regarding the markets, financial plans, and legislative effects in such periods.

The current period offers many topics, and even opportunities, that should be discussed. These include:

  1. Basic Communication
  • Touching base with clients to determine their mindset. Is the current environment causing fear or is it looked upon as an opportunity to purchase assets at a reduced price? Each client will have a unique perspective, and it is important for your advisor or broker to understand your view. Any appropriate action will vary based on your circumstances and perspective.

2. Focus on Goals

  • It is extremely important that any action be consistent with long term goals and an established financial plan. Often emotional and hasty decisions made in times of market turmoil are harmful to the ability to achieve a long-term plan.

3. Put Cash to Work or Increase Risk

  • If you see investment opportunity when markets fall, this is a great opportunity to discuss investing extra cash or increasing risk in accounts.

4. Roth IRA Contributions and Conversions

  • Consider making 2020 contributions and conversions while markets are lower.

5. Tax Considerations of the Market Decline

  • If you have investments with a low cost basis that you have held to avoid taking the gains, these positions will likely have lower gains or no gains at this point. This may be a good time to discuss reducing or getting out of such positions.
  • Gains on investments made in non-retirement accounts will be subject to long-term capital gains rates if held for twelve months or longer
  • For some clients a partial or full conversion from a traditional IRA to a Roth IRA should be considered. Funds in a traditional IRA have not been taxed. By converting, taxes will likely be owed. Because balances in most traditional IRAs are presently lower, the associated taxes owed may also be lower. As an added bonus, if the markets bounce back in the next couple years, the growth on any converted money will occur in the Roth IRA and should not be taxable in the future.

6. Periodic Withdrawals

  • If you have consistent withdrawals, monthly or quarterly for example, from investment accounts, you may want to discuss funding the withdrawals from any cash or fixed income investments that are available. This will keep you from selling equities at a reduced price.Legislative Updates

7. Legislative Updates

  • Filing deadline – For most people, 2020 tax filings are not due until July 15th (instead of the normal deadline of April 15th).
  • Federal quarterly estimated tax for April 15th has been extended to July 15th; second quarter estimated tax payment has also been extended to July 15th.
  • Required Minimum Distribution (RMD) – If you are normally required to take an RMD from any type of IRA or from your workplace retirement plan, you will not have to do so in 2020.
  • IRA Withdrawals and 401k Loans – the CARES Act relaxes some of the rules regarding these items. Your advisor or broker should be able to discuss this in more detail should you have a need.
  • Charitable Contributions – for 2020 there is no limit on the amount of a cash gift you can donate to a charity and subsequently receive an offsetting deduction, in the amount of the gift, from your income. If you’ve ever considered a large gift to a charity, you should discuss with your advisor if 2020 is the appropriate year. This change does not apply to donations to donor advised funds.

CapSouth advisors are prepared to discuss all these topics with clients and prospects, and they have been actively doing so over the last few weeks. If your current advisor or broker is not discussing them with you or you have no current advisor, we would welcome the opportunity to speak with you and to potentially begin a new relationship.

To speak to a CapSouth advisor about these topics, contact our office at 800.929.1001 or visit our website at www.capsouthwm.com

Investment advisory services offered through CapSouth Partners, Inc., an independent Registered Investment Advisor, dba CapSouth Wealth Management. CapSouth Partners does not provide tax or legal advice. Please consult your tax or legal advisor prior to making decisions which may have tax or legal consequences. Information contained herein is believed to be reliable but is not guaranteed as such by CapSouth. Nothing contained herein should be construed as individual investment advice; all commentary is of a general nature. This commentary contains opinions; any opinions presented should not be construed as fact and are not in any way a guarantee of future events, returns, or outcomes.

Provisions in the 2020 Stimulus Plan that Affect your Retirement Accounts and Income Taxation

by: P. Lewis Robinson, CPA

Retirement Accounts Required Minimum Distributions (RMDs):

  •  For the calendar year 2020, no one will have to take a required minimum distribution from any individual retirement accounts or workplace retirement savings plans, like a 401(k). That way, you aren’t forced to sell investments that may have fallen in value, which would lock in losses. If you don’t need the money now, you can let the funds remain invested in expectation that they will recover.
  • If you took your 2019 or 2020 RMD within the last 60 days, you are also in luck. You can roll over your distribution to the same or a different IRA within 60 days of the prior distribution and not pay the income tax on the withdrawal (as long as you have not made an IRA Rollover within the 365 days preceding your distribution).
  • Normally, RMDs cannot be converted to Roth IRAs, but now since there are no RMDs, you can withdraw IRA funds at low values and low tax rates and convert them to your Roth IRA. Yes, you pay taxes on the conversion, just like you would have on your RMD. Now, under this 2020 RMD waiver period, you can get more for the tax you pay by being able to convert the funds you withdraw to your Roth IRA at a relatively low tax cost.

Provisions to withdraw funds without paying a 10% penalty:

  • You can withdraw up to $100,000 from your retirement accounts this year without the usual 10 percent penalty for being under age 59 ½, if the need for the funds is a result of COVID-19.
  • You will also be able to spread out any resulting income taxes that you owe over three years from the date you took the distribution. And if you desire, you could put the money back into the account before those three years are up, even though the rules may normally keep you from making that large of a contribution.

Borrowing from 401(k):

  • You can take out twice the usual amount. For 180 days after the passing of the bill, with certification that you’ve been affected by the pandemic, you’ll be able to take out a loan of up to $100,000. The normal rule limiting the withdrawal to half of your balance has been suspended.

Charitable Contributions A deduction for charities even if you don’t itemize:

  • $300 per year without having to itemize deductions
  • To qualify, you must give cash to a qualified charity and not to a donor-advised fund. You may be aware of donor-advised funds, as we often recommend these charitable accounts to batch contributions in a particular year in order to maximize deductions and to accomplish other objectives. If you’ve already given money since Jan. 1, that contribution counts toward the $300 cap.

Limits on annual contributions have been lifted:

  • As part of the bill, donors can deduct 100 percent of their gift against their 2020 adjusted gross income.
  • If you have $200,000 of income, you can give $200,000 to a public charity and deduct the full amount in 2020.
  • The new deduction is only for cash gifts that go to a public charity. If you give cash to, say, your private foundation, the old deduction rules apply. And while the organizations that manage donor-advised funds are public charities, you do not get the higher deduction for donating cash to your donor-advised fund.

If you have any questions about how these changes might impact your financial plan, please contact your local CapSouth office or 800.929.1001.

To learn more about CapSouth Wealth Management, please visit our website at www.CapSouthWM.com

CapSouth Partners, Inc., dba CapSouth Wealth Management, is an independent registered Investment Advisory firm. CapSouth does not offer tax, accounting, or legal advice. Consult your tax or legal advisors for all issues that may have tax or legal consequences. Information provided by sources deemed to be reliable. CapSouth does not guarantee the accuracy or completeness of the information. 

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