Huge Week for the Market (Short-term)

After 3 weeks of declines for the S&P 500, this week may be where the rubber meets the road.

Quarterly profit reports heat up, and we’ll hear important economic data.  On the earnings front this week, we’ll hear reports from Meta, Microsoft, Tesla, Alphabet, Verizon, UPS, PepsiCo, Freeport, American Airlines, Phillip Morris and more.

With interest rate cut expectations down significantly, profit reports need to exceed expectations for the market to climb higher, unless inflation data turns south. Later this week, we’ll hear the Personal Consumption Expenditure (PCE) report that may shed additional light on the state of inflation. 

Last week, the retail sales report suggested the consumer is still strong and expectations for this week’s 1st quarter Gross Domestic Product Report (GDP) call for a reading of over 2.5%.

All indexes fell except the Dow, which was flattish, up .02%. The S&P 500 fell (3.25%), the Nasdaq (5.49%) and the Russell 2000 (3.22%).

Foreign stocks shed (1.63%) and Emerging Markets (2.15%).

Oil is staying range bound for the time being @ 83.24/barrel.  The Israel/Iran issue may impact the direction either way in the coming weeks.

Bond yields rose with the 10-Year finishing the week with a yield of 4.623%.

The markets are off of their recent highs by approximately 5%.  It’s normal, after such a strong run in the markets for a pullback to occur.  How much deeper will this slide go?  We’ll know shortly, that’s for sure!

When the new Secure act was passed, it stated that non-spouses who inherited and IRA after 2019 have specific requirements. 

One requirement, is the full account must be withdrawn by the end of the 10th year, after the year the decedent passed away.

If the decedent passed away “prior” to their RMD age, the beneficiary does NOT need to withdraw any funds prior to year 10.

If the decedent passed away “on or after” their RMD age, the beneficiary is required to take annual RMD’s from years 1-9 and then empty the account after year 10.

Last week the IRS again came out and stated, if the decedent passed away on or after their RMD age, the beneficiary does NOT need to take an RMD until year 2025.  2024’s requirement is now waived.

Why the confusion?  Well, it’s the IRS, plain and simple.

For those in this position, you may believe not taking a distribution this year makes sense.  Keep in mind, after 2025, if Congress does not act, all tax rates will increase going forward.  If you wait until the 10th year without taking any distributions, your future tax liability may be significant.

This situation definitely warrants a discussion to determine what makes the most sense in your particular situation.  The answer is somewhat challenging because of the uncertainty of future tax rates.

For clients in this situation, we’ll be discussing your options.  For non-clients, feel free to schedule to a complimentary consultation to review your situation. 

Thank you!

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