Let me start by wishing all of you a very Merry Christmas and a Happy Hanukkah season. As we enjoy our time with family and friends, it is important to take stock of all the wonderful things that surround us every day. As we quickly approach year-end, we are taking stock of our clients and their respective investments and financial plans. While things have not gone quite as planned this year, we strongly believe in the long-term resiliency of our economy and financial markets. While there is still work to be done by the Federal Reserve in the months ahead, we are very optimistic that 2023 will see us getting to the “other side” of things.
The market activity this week was in the simplest of terms, sloppy. The NASDAQ Index was particularly weak, in what I believe is more year-end tax loss selling. I expect this trend to continue into next week as investors position their portfolios for 2023 and beyond. It is completely normal to see this type of activity given the year we have seen, especially in the technology sectors that have been hit particularly harder than usual. While it is never easy to swallow a loss in any given year, there are potentially advantageous tax reasons for doing this. Many of us experienced this firsthand last year with larger than usual capital gains and few losses to offset them. The IRS allows capital losses to offset taxes owed on capital gains in any given year. In the absence of gains for a particular year, capital losses larger than $3,000 can be carried forward into future years. While this strategy may only be appropriate for taxpayers in certain scenarios, we are advocates of considering this where and when appropriate. We welcome questions on this topic if you are unsure about your specific situation but rest assured we are, and have been monitoring and adjusting our investments as appropriate.
It has been a relatively quiet political environment post-election, as the respective parties either celebrate or recalibrate their thinking. There has however been one piece of legislature we are actively watching. The Secure Act 2.0 has gained strong support on both sides of the aisle and looks like it will move through the proverbial system before everyone heads home for the year. This has all been tucked into the newest spending bill needed to fund the government for the 2023 fiscal year. We are viewing this as a big win for investors and retirees. Some highlights include:
- Requiring automatic 401(K) enrollment by employers.
- Increasing the age when RMDs would need to start (currently 72 but moving to 73 in 2023 and then to age 75 in 2033).
- Creating bigger “catch-up” contributions for older retirement savers.
- Improving worker access to emergency savings.
- Broadening uses for unused college savings money.
There are several additional pieces to this latest proposal, and I’ve only listed a few of the highlights. Once things are signed, sealed, and delivered, we will pass along more information. This will have a direct impact on almost everyone in a positive manner, something we haven’t seen in some time!
As you venture out into what looks to be a very COLD holiday weekend for nearly everyone across the country, stay safe and warm. More importantly, take some time to relax and celebrate with your loved ones. Enjoy!
https://www.investopedia.com/articles/taxes/08/tax-loss-harvesting.asp
Christopher E. Wasson, CFP®
President
Mosaic Asset Partners, LLC
1122 Kenilworth Drive, Suite 310
Towson, MD 21204
410.821.0089 fax 410.821.5993
MosaicAssetPartners.com
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Mosaic Asset Partners, LLC is not affiliated with Kestra IS or Kestra AS. Investor Disclosures: https://www.kestrafinancial.com/disclosures
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.