Month: January 2020

2020 Investment Outlook – January Newsletter

Happy New Year & Decade! Our January newsletter focuses on the 2020 investment outlook, which we hope you find value reading. In addition, we provide the latest U.S. Tax News from James Cassidy, International Tax Consultant at Schulman Lobel. Finally, we share the most recent monthly commentary from Pacific Asset Management.

2020 Investment Outlook

We have researched many of the investment and economic outlooks available and have found a wide range of views for what 2020 has in store.  Here is a great article from Bloomberg providing a reader’s digest of the major Wall Street firms’ outlook for the year ahead:

Investors should not expect the same once in a decade returns 2019 delivered for virtually every major asset class. History suggests that years like 2019 are usually followed by more modest growth – so investors should approach 2020 in a positive spirit. At the same time, elevated uncertainty and signs of slowing global growth create a challenging backdrop for markets in 2020 and beyond.

We expect a good year for investing, particularly in the US equity market, as long as the following events occur as expected:

  • US-China trade negotiations continue to advance and phase II of a deal is agreed to.
  • Inflation moves modestly higher but remains below 2%
  • The US Presidential election is between Donald Trump and a centrist Democrat such as Joe Biden.
  • GDP growth in the US and Europe remains the same or increases slightly
  • Avoidance of a disorderly Brexit.

The key risks to be aware for 2020 that can have a major impact on investing are highlighted below:

  • An oil price shock (significant price increase) has the potential to cause a recession. We believe continued escalated tensions in the Middle East may lead to an oil price shock.
  • An unforeseen loss in consumer confidence
  • Brexit and its impact on the Eurozone

U.S. Tax News

As an early holiday gift, on December 19, the Senate passed the “Setting Every Community Up for Retirement Enhancement” Act (“SECURE Act” or “Act”), which was signed into law by the President on December 20. The SECURE Act expands opportunities for individuals to increase their savings and makes administrative simplifications to the retirement system.

Some of the changes in law to be aware of:

US Pension Changes

The Act removes the age limit at which an individual can contribute to a traditional IRA. For 2019 and earlier, an individual could not contribute to an IRA after age 70½; the Act will allow anyone that is working and has earned income to contribute to a traditional IRA regardless of age starting with the 2020 tax year.

Effective January 1, 2020, under the SECURE Act, the required beginning date for an IRA withdrawal is the April 1 following the calendar year in which the IRA owner attains age 72. Under the old law the required beginning date was based on age 70 ½.

Starting in 2020, upon the birth or adoption of a child, the Act permits an individual to take a “qualified birth or adoption distribution” of up to $5,000 ($10,000 for a married couple) from an applicable eligible defined contribution plan or IRA. This distribution is not subject to the 10% early withdrawal penalty, but income tax will still be due.

With few exceptions, if one inherits an IRA after December 31, 2019, you will be required to withdraw the assets within ten years. If you inherited IRA from an original IRA owner who passed away prior to January 1, 2020, no changes to your current distribution schedule are required. Exceptions to the new 10-year distribution requirement include assets left to a surviving spouse, a minor child, a disabled or chronically ill individual, and beneficiaries who are less than 10 years younger than the decedent.

There is increased access to employer-sponsored retirement plans for certain part-time employees.

The Act also allows for expanded provisions for 401(k) post retirement plans including increased incentives for employer implementation, increased participation for certain part-time employees, and increased plan options for single and multi-employer plans.

Sec. 529 Education Savings Plans

Individuals now can pay up to $10,000 (lifetime benefit) of student loans with 529 plan assets.

We expect the Internal Revenue Service to clarify many of the new provisions in the coming months.

Should you require additional information please feel free to contact me at (212) 868-5781 and at

Monthly Market Commentary

Equity markets ended the year in a jubilant mood as the US and China agreed phase one of a trade deal, signaling the first de-escalation of a trade war that started almost two years ago.

Please click the link below to read the latest monthly commentary:

Pacific Asset Management – January Commentary