Category Archives: News

A Common Mistake High Income Earners Make in 401(K) Savings and How to Avoid it

February 11, 2019

I started working with a new client that completely missed out on maxing out his 401(k) contributions for the 2018 year when he thought he was set up to max it—all due to the 401(a)(17) limitations. He contributed $11,000 instead of the $24,500 maximum he could put in pre-tax in 2018, which cost him a significant amount in tax savings.

Who Misses Maxing Out Their 401(k)?

This particular client was a high income earning corporate executive from Chevron aiming to max out his contribution to the Chevron Employee Savings Investment Plan. He had a long career at Chevron and was grossing over $600,000 annually between base pay and bonus. (I see this same issue with many corporate professionals I work with, including those from Shell, BP, Marathon, BMC and others.)

 

He knew that for the 2018 year the max amount he could put into the 401(k) is $24,500, as he was over age 50. At the beginning of the year, he took that number and divided it by his expected benefit eligible compensation (at Chevron this is cash compensation not including stock); $24,500 / $600,000 = 4%. His assumption was that if he set his pre-tax contribution to his 401(k) to 4%, then he would max out by year-end.

 

It wasn’t until we sat down with him in January of 2019 and showed him his 2018 401(k) statement, that he realized he missed out on additional tax savings he could have had.

 

(For the 2019 year, the maximum pre-tax contribution for someone over age 50 is $25,000.)

What Happened?

There is a fairly unknown rule regarding 401(a)(17) contribution limits that prevented the Chevron saver from fully maxing out his pre-tax contribution to his 401(k). The 401(a)(17) rules set a maximum on compensation that can be used to contribute to a 401(k) and many other types of retirement plans. Specifically, the 401(a)(17) rules only allow the Chevron saver to use the first $275,000 of income to save into a qualified retirement plan. Once the saver started making over $275,000 a year ($280,000 in 2019), he can no longer make contributions to his company’s 401(k) plan.

 

Since this saver set his contribution to 4%, he was only able to put in $11,000 (= $275,000 * 4%) into the plan—missing out on $13,500 of pre-tax contributions he could have made into the plan!

 

(There are exceptions to the 401(a)(17) earnings limit rules whereby a company can allow their employees to consider income past the $275,000 when making contributions to retirement plans, but few allow it, as it regularly messes up anti-discrimination testing, which causes bigger problems.)

How to Ensure You Max Your Contributions

The saver at Chevron could have easily ensured he maxed out his contribution to the 401(k) by slightly adjusting his formula. He should take the max contributions of $24,500 for 2018 and divide it by the income earnings limit of $275,000 for 2018.

 

For 2018 contributions for those over 50, $24,500 / $275,000 = 9%

For 2018 contributions for those under 50, $18,500 / $275,000 = 7%

 

For 2019 contributions for those over 50, $25,000 / $280,000 = 9%

For 2019 contributions for those under 50, $19,000 / $280,000 = 7%

 

Note that both the max contribution and the earnings limit are inflation adjusted annually. Both limits utilize the same cost of living adjustment, so in most cases, the percentage deferral stays the same from year to year.

 

Generally speaking, if you are a high earner and subject to the 401(k) earned income limits, you will not be able to contribute to your 401(k) proportionally throughout the entire year. Often, we see high earners make contributions to their 401(k) over the first half to three quarters of the year. Once they have hit the earnings limit, their net paycheck goes up as they can no longer make contributions to their company 401(k). It’s important to realize that if you are a high earner you will have lumpy take-home pay, with lower earnings at the start of the year than the end.

After-Tax and Roth Contributions are also Affected

Do also note that all employee deferrals are affected by the earnings limits. This includes Roth 401(k) contributions and Non-Roth After-Tax 401(k) contributions.

 

If you are aiming to max out pre-tax and after-tax contributions to the 401(k), it’s important to also ensure are you maxing out contributions to the after-tax source prior to hitting the earnings limit. When doing the math, remember to take the max that you can contribute to the after-tax source and divide by the earnings limits.

 

For example at Chevron, in 2018 the after-tax limit for most employees is $15,500. To ensure you are able to max out your contribution to the after-tax source in your 401(k), you have to defer 6% (= $15,500 / $275,000) in addition to the pre-tax contribution.

Your Employer Contribution is Also Capped

 

The 401(a)(17) limits apply not only to employee contributions but also to employer contributions. Once you earn over the benefit eligible contribution limit ($280,000 for the 2019 year), your employer is no longer able to put money into your 401(k). Many employers will set up non-qualified retirement plans so they can continue making contributions even if they cannot direct them to the 401(k). 

 

At Chevron, the company continues to contribute the 8% but allocates the 8% for every dollar of income earned over and above the $280,000 limit to the Retirement Restoration Plan (RRP). At Shell Oil, they contribute the 10% over the limit to the Provident Fund Benefit Restoration Plan (PF BRP).

 

hese non-qualified retirement plans have additional limitations and restrictions making them a nice benefit, but less attractive than traditional 401(k)’s. If you have a non-qualified plan there are many considerations you should asses leading up to and before electing a retirement date to maximize benefit and minimize taxes.

How We Help

As part of our comprehensive asset management and planning process, we would sit down with you annually and review your compensation and benefit plans, educating you on your options and assisting you in making the changes necessary to optimize your specific situation. We get to know you and formulate a plan to assist with your savings goals taking into account taxes, investments, and your employer’s compensation and benefit options. Things are always changing and we understand that as time goes on, your personal finances get more complex. We believe that if you are not looking at the full picture, then you are likely leaving money on the table. That is why our promise to clients is that we are continuously planning on your behalf. If you would like to meet with one of our advisors or are interested in receiving more information regarding our services, please contact us at (713) 439-1200 or click here to submit a request.

 

Each client situation is different and not all outcomes are the same.
Performance from individual returns may vary substantially from those presented due to differences in the timing of contributions and withdrawals, account start dates, and market results. Past performance may not be indicative of future results.  Therefore, no current or prospective client should assume future performance.

2019 Update – Chevron Phillips Employees Can Save MORE in the 401(k) Savings and Profit Sharing Plan This Year

January 16, 2019

The IRS has recently released the 2019 retirement plan contribution limits.

 

For super-savers at Chevron Phillips, things are looking up. Here are a few of the most noteworthy changes:

 

–> Chevron Phillips employees can now contribute $19,000 (or $25,000 for those over 50 years old) of pre-tax or Roth savings to the Chevron Phillips Savings and Profit Sharing Plan.

 

How Chevron Phillips Employees Can Maximize Their Retirement Plan Contributions

It’s important to ensure that you are contributing at least 6% of your pay every pay period to receive the full 4.5% company match. At Chevron Phillips, it is easy to miss the opportunity to receive the company contributions, so make sure you do the math every year!

 

2019 Annual Compensation Limits and Strategic Saving for Chevron Phillips Employees

The annual compensation limit for 2019 has increased from $275,000 to $280,000. If you make more than $280,000 in base and bonus compensation for 2019, remember to ensure you max out your Chevron Phillips 401(k) contributions prior to earning $280,000 of income. After you earn $280,000 of income, you can no longer contribute to the 401(k).

 

Many Chevron Phillips employees will be able to take advantage of higher contribution limits for backdoor Roths. With the IRA contribution limits now $6,000 (and $7,000 if over age 50), it means super-savers at Chevron Phillips can put away up to $37,600 (or $44,600 if over age 50) between the Chevron Phillips 401(k) and backdoor Roths into tax-preferred retirement accounts. It’s important to keep in mind that these are the maximum numbers and are subject to the income limits outlined in the Chevron Phillips Savings and Profit Sharing Plan.

 

The 2019 limit adjustments will be advantageous for super-savers at Chevron Phillips and it is important to be sure that you make the most of these changes. Willis Johnson & Associates will be working with our clients over the next few months to assist in adjusting contributions to ensure they get the full 4.5% company per paycheck match.

 

In 2019, we will follow up with clients who are eligible to take advantage of backdoor Roth IRAs to ensure they are on track for success. We will help facilitate after-tax rollouts from the 401(k) in the second half of the year once contributions have been maxed.

 

If you have any questions about the 2019 contribution and compensation limits, please contact your advisor, or schedule a free consultation with one of our Chevron Phillips specialists.

 


Jason Mishaw, Associate Wealth Managers,Jason Mishaw, MSF

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As an associate wealth manager at Willis Johnson & Associates, Jason Mishaw is actively involved in both the Financial Planning role and the Investment Management role. On the financial planning side, he helps to implement customized financial plans for WJA clients. On the Investment Management side, under the supervision of a Senior Wealth Manager, he assesses the financial goals of WJA clients and assists in creating a customized strategy to further those goals.

 

Jason received a Master of Science in Finance at the University of Houston C.T. Bauer College of Business, a B.A. in economics and a B.S. in biochemistry and cell biology from Rice University.

 


Willis Johnson & Associates is a registered investment advisor. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Insurance products and services are offered or sold through individually licensed and appointed agents in various jurisdictions.

Annual Market Review for 2018

January 29, 2019

The Markets 2018 (Annual Overview)

 

Trade wars, midterm elections, and market volatility highlighted 2018 for investors.

 

In an attempt to reduce the trade deficit, President Trump pushed to rewrite trade agreements with several long-time trade partners of the United States. Trump amended the trade agreement with South Korea, imposed tariffs on steel and aluminum, and renegotiated the North American Free Trade Agreement (now called the United States-Mexico-Canada Agreement). But the trade war with China has been the most compelling and impactful, not only to the countries directly involved, but to much of the global economy. Reciprocal tariffs were imposed by each economic giant throughout the year. There was a temporary truce achieved following the Group of 20 summit, but there was no definitive agreement reached.

 

Elections in November showed how politically divided the nation is. Democrats picked up 40 congressional seats to win control of the House of Representatives for the first time since 2011. On the other hand, Republicans maintained control of the Senate. The end result is a Congress that has become more divided, at least politically. Oh, and the federal government shut down in late December due to a budgetary stalemate between President Trump and Congress, principally over funding for a border wall.

 

For the year, the stock market reached new highs and gave it all back by the end of December. “Volatility” is the word that best describes the market in 2018. Despite the economy expanding at a rate not seen in many years, favorable corporate earnings reports, strong consumer spending, tepid inflation, and plenty of jobs to be had, stocks floundered. Trade wars continued, the Federal Reserve hiked interest rates, oil prices bottomed out, and long-term bond prices rose. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), which provides a measure of market risk and investors’ sentiments, spiked in February, then was relatively stable through much of the summer. However, by the end of December, the VIX jumped again. Stocks were sold, bought, and sold again in rapid order, causing benchmark indexes to post noteworthy gains and losses on an almost daily basis. As a result, investors rode a roller coaster of stock prices throughout the year.

 

The year saw some positive highlights as well. The economy expanded at an annual rate exceeding 3.0% for the first time in several years. The unemployment rate hit the lowest mark since 1969. In November, 1.7 million persons were marginally attached to the labor force, an increase of 197,000 from a year earlier. The Federal Reserve, based on the strength of the economy and labor market, raised interest rates four times during the year. Consumer income rose and purchases increased, and inflation exceeded 2.0% midyear, only to fall back below that target by the end of 2018.

 

Snapshot 2018

The Markets

 

Equities: The year 2018 may ultimately mark the end of what was nearly a 10-year bull run. At the start of the year, January was a good month; February and March were not. However, as spring approached, growth in equities began to pick up steam, leading to record highs in several of the benchmark indexes during the summer months. But by October, volatility began to increase, as investor concerns about the impact of a trade war between the world’s largest economies was enough to prompt sell-offs, sending stock prices lower. November was a little better, but December proved to be tumultuous. Ultimately, the benchmark indexes listed here could not match their 2017 year-end values. In fact, several of the benchmark indexes suffered their worst annual losses in many years.

 

• Each of the benchmark indexes listed above fell well below their respective 2017 year-end closing values. Compared to 2017, the Russell 2000, which had eclipsed its 2017 closing mark by over 13% in September, ended the year down over 12%. The Global Dow was not far behind, falling more than 11% by the end of December. The large caps of the Dow and S&P 500 ended the year down 5.6% and 6.2%, respectively. The Nasdaq, which led the way for much of the year on the strength of tech stocks, gave all of the gains back, dropping almost 4% below where it started the year.

 

Bonds: As stock prices soared during the first half of 2018 and interest rates moved incrementally higher, the demand for long-term bonds was marginal. Yields on 10-year Treasuries rose almost 30 basis points in January as bond prices fell. Long-term bond yields continued to climb, reaching 3.0% in July. However, as volatility increased for stocks, the yield on long-term bonds began to fall as demand drove prices higher. Ultimately, the yield on the benchmark 10-year Treasuries closed 2018 at 2.68%, up from the 2017 closing yield of 2.41%.

 

Oil: Oil prices began 2018 at over $60 per barrel and continued pushing higher through January, reaching almost $70 per barrel in May. Oil prices remained in the $60 range for most of the fall, spiking to almost $76 in early October. But fears of overproduction began pushing oil prices lower in November. Prices continued to fall, hitting a low of nearly $42 per barrel in mid-December. Ultimately, oil prices closed 2018 at $45.81 per barrel — their first annual loss since 2015. As oil prices rose and fell, so did prices at the pump. Retail regular gasoline prices closed the year around $2.321 per gallon on December 24, about $0.151 less than a year ago.

 

FOMC/interest rates: The Federal Open Market Committee raised interest rates four times during 2018. Each time the target range increased by 25 basis points. The first increase occurred in March, followed by a rate increase in June, an increase in September, and a final bump occurring in December. For the year, the target range has increased 100 basis points, from 1.25%-1.50% to 2.25%-2.50%. Following each rate increase, the Committee expressed the expectation that the labor market would remain strong and the economy would continue to expand, while noting that private business investment had slowed. The Committee changed its stance by the end of the year and reduced its forecasts from four rate increases in 2019 to two 25-basis-point rate increases in 2019.

 

Currencies: The dollar maintained a relatively strong position throughout much of 2018. The Wall Street Journal Dollar Index, which measures the U.S. dollar against the currencies of 16 other countries, closed 2018 at $89.67, up from its 2017 year-end mark of $85.98. Another currency index, the ICE U.S. Dollar Index, which measures the dollar relative to a basket of six foreign currencies, closed 2018 about 4.5% higher — its best annual gain in several years.

 

Gold: Through the first quarter of 2018, gold hovered around $1,350 a troy ounce. Rising interest rates, favorable stock market returns, and a strong dollar helped to push gold prices lower during the summer months. However, as stock prices faltered, gold prices pushed closer to their early-year values, finally closing 2018 at $1,284.70.

 

The Economy (through November 2018)

 

Employment: The U.S. labor market was solid throughout 2018. Employment growth averaged 209,000 new jobs per month in 2018, compared with an average monthly increase of 174,000 new jobs in 2017. The unemployment rate ended the year (as of November 2018) at 3.7% — lower than the 4.1% rate at the close of 2017. Over the year, the unemployment rate and the number of unemployed persons declined by 0.4 percentage point and 641,000, respectively. According to the Bureau of Labor Statistics, there were 6.0 million unemployed persons in November 2018, down from 6.6 million unemployed in November 2017. The labor force participation rate was 62.9% in 2018, up slightly from last year’s rate of 62.7%. The employment to population ratio was 60.6% (slightly better than 60.1% in 2017). In 2018, the average workweek was 34.4 hours (34.5 hours in 2017). Average hourly earnings in 2018 were $27.35, an increase of 3.0%, or $0.80, over $26.55 in 2017.

 

GDP/budget: Economic growth, as measured by the gross domestic product, expanded throughout the year, increasing at an annual rate of 3.4% in the third quarter of 2018. The first-quarter GDP rose 2.2%, followed by a 4.2% gain in the second quarter. Gross domestic product essentially measures what the economy produces, such as goods and services. On the other hand, gross domestic income measures all income earned from the production of goods and services, such as wages, profits, and taxes. GDI rose 4.3% in the third quarter of 2018, compared to a 1.3% increase in the third quarter of 2017. The average of gross domestic product and gross domestic income, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 3.8% in the third quarter, compared with an average annual increase of 1.9% in 2017. The federal deficit was roughly $779 billion for fiscal year 2018, an increase of $113 billion over the 2017 fiscal year deficit of $666 billion. The government fiscal year runs from October through September.

 

Inflation/consumer spending: Inflation, as it relates to consumers, had reached the Federal Reserve’s stated target rate of 2.0%, only to fall below that level in November. The personal consumption expenditures (PCE) price index, the measure of the increase in the prices of goods and services purchased by consumers, was 1.8% higher in November 2018 compared to November 2017. Core PCE, which excludes the volatile food and energy components, expanded at an annual rate of 1.9% in 2018. Personal (pre-tax) income increased 4.1% in the third quarter of 2018 compared to an annual rate of 4.4% in 2017. After-tax income (disposable personal income) increased 4.0% in the third quarter of 2018 after expanding at an annual rate of 4.4% in 2017. Another measure of inflation, the Consumer Price Index, measures the price level of a basket of consumer goods and services purchased by individuals. Over the 12 months ended November 2018, the CPI rose 2.2% (2.1% in 2017).

 

Housing: A lack of inventory, coupled with rising mortgage interest rates, contributed to a rather lackluster performance in the housing sector. Through November, existing home sales are down 7.0% from a year ago. The November annual sales rate of 5.32 million was notably lower than the 5.72 million rate for November 2017. The median existing-home price for all housing types in November was $257,700, up 4.2% from November 2017 ($247,200). November’s price increase marks the 81st consecutive month of year-over-year gains. Total inventory of existing homes for sale in November was 1.74 million — 4.2% greater than last November (1.67 million).

 

Manufacturing: Manufacturing and industrial production performed better in 2018 than the prior year. The Federal Reserve’s index of industrial production revealed that total industrial production rose 3.9% over the 12 months ended in November 2018. Over the same period, the output of consumer goods increased 1.5% and production of business equipment expanded 4.1%. Capacity utilization for manufacturing increased 2.0% over the past year. New orders for manufactured durable goods (expected to last at least three years) increased by 8.4% from 2017. Shipments were up 7.2%. Capital goods — tangible assets used by manufacturers to produce consumer goods — also expanded in 2018. New orders for capital goods increased by 8.5%, and shipments of capital goods expanded by 7.3%.

 

Imports and exports: From January through October, the international trade deficit for goods and services was $503 billion, or 11.5% greater than the deficit over the same period in 2017. The goods deficit totaled $729 billion, while services had a surplus of $226 billion. Exports increased from $1.944 billion in 2017 to $2.093 billion. Imports increased from $2.400 billion to $2.600 billion. Import prices increased 0.7% over the past 12 months ended in November. Export prices expanded by 1.8% over the 12 months ended November 2018.

 

International markets: International equities did not enjoy the same upward momentum in 2018 compared to the prior year. Economic expansion stalled for many international economies as heightened trade tensions between the United States and several of its trade partners and tighter monetary policies cast a shadow over economic expansion. Following demands for more favorable trade terms, the United States imposed tariffs on imports from several of its trade partners. While negotiations ultimately resolved trade wars with some countries, notably Mexico and Canada, a major impasse still exists between the United States and China. The impact on both countries has been palpable, particularly in China, where fixed-asset investment, retail sales, and industrial output have each decreased in 2018 compared to 2017. In Europe, Great Britain is scheduled to leave the European Union soon, yet it remains unclear under what terms Brexit will take place. Also, several countries tightened their respective monetary policies in 2018 on the heels of economic growth in 2017. The lower interest rates in 2017 that helped propel consumer spending and business investment began to rise in 2018, hindering equity and economic expansion.

 

Eye on the Year Ahead

 

The economy grew at a respectable rate in 2018. Will it continue along the same path in 2019? Fears of an economic slowdown lingered at the end of last year and may be realized in 2019. The housing market hasn’t picked up the pace and is generally lagging behind other economic mainstreams. Also, with inflation inching ahead, economic stimulus may be easing, which could lead to tighter financial conditions moving ahead. Certainly if the global trade wars between the United States and China continue, not only will the impact be felt domestically, but a rift between the world’s two largest economies is sure to affect global economies and markets as well. And, as 2018 closes and 2019 begins, the federal government remains shut down.

 


Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful. 
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.

 

IMPORTANT DISCLOSURES
Willis Johnson & Associates is a registered investment advisor. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Insurance products and services are offered or sold through individually licensed and appointed agents in various jurisdictions.
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019

Marathon Oil Employees – How the 401(k) Contribution Limit Increase for 2019 Impacts You

January 15, 2019

The IRS has recently released 2019 retirement plan contribution limits.

 

For super-savers at Marathon, things are looking up. Here are a few of the most noteworthy changes:

 

–> Marathon employees can now contribute $19,000 (or $25,000 for those over 50 years old) of pre-tax or Roth savings to the Marathon Oil Thrift Plan.

 

How Marathon Employees Can Maximize Their Retirement Plan Contributions

It’s important to ensure that you are contributing at least 6% of your pay every pay period to receive the full 7% company match. At Marathon, it is easy to miss the opportunity to receive the company contributions, so make sure you do the math every year!

 

2019 Annual Compensation Limits and Strategic Saving for Marathon Employees

The annual compensation limit for 2019 has increased from $275,000 to $280,000. If you make more than $280,000 in base and bonus compensation for 2019, remember to ensure you max out your Marathon 401(k) contributions prior to earning $280,000 of income. After you earn $280,000 of income in a calendar year, you can no longer contribute to the 401(k).

 

If you make $120,000 or more annually, you are not eligible to contribute after-tax funds to your 401(k) account. However, you can possibly make after-tax contributions to an IRA and convert that contribution to a Roth.

 

In addition, many Marathon employees will be able to take advantage of higher contribution limits for backdoor Roths. With the IRA contribution limits now $6,000 (and $7,000 if over age 50), it means super-savers at Marathon can put away $44,600 (or $51,600 if over age 50) between the Marathon 401(k) and backdoor Roths into tax-preferred retirement accounts.

 

The 2019 limit adjustments will be advantageous for super-savers at Marathon and it is important to be sure that you make the most of these changes. Willis Johnson & Associates will be working with our clients over the next few months to assist in adjusting contributions to ensure they get the full 7% company per paycheck match.

 

In 2019, we will follow up with clients who are eligible to take advantage of backdoor Roth IRAs to ensure they are on track for success.

 

If you have any questions about the 2019 contribution and compensation limits, please contact your advisor, or schedule a free consultation with one of our Marathon specialists.

 


John Siegel

John Siegel, CFP®

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John Siegel is a Certified Financial Planner™ practitioner with over a dozen years of experience in the financial services arena, as well as many years serving in capacities throughout the legal and non-profit sectors. 

 

John earned his Bachelor of Arts at Macalester College in St. Paul, Minnesota, and completed his Certified Financial Planner™ studies at Rice University. John is currently pursuing his Enrolled Agent (EA) designation with the Internal Revenue Service.


 

Willis Johnson & Associates is a registered investment advisor. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Insurance products and services are offered or sold through individually licensed and appointed agents in various jurisdictions.

Shell GESPP: Why You Must Re-Enroll and Other Changes to Your Benefits Plan

December 23, 2018

An Employee Stock Purchase Plan is a benefit that allows employees to purchase company stock at a discount from fair market value.

 

U.S. tax law allows the discount to be as high as 15%. Shell Oil’s employee stock purchase plan is called the Global Employee Share Purchase Plan (GESPP).

 

What is the Shell General Employee Share Purchase Plan?

The GESPP is offered as part of the effort for Shell to tie its employee’s financial success to the company’s, but what is really valuable is the discount that goes along with the GESPP plan. Over time, being able to consistently purchase stock year after year at a 15% discount can add up to be a lot of money. In addition to the 15% discount, there are tax benefits to GESPP that most employees are not aware of, which I will explore in more detail below. For most, this is a plan you do not want to miss when you include the value of the discount and the tax benefits.

 

Let us dive further into how Shell’s General Employee Share Purchase Plan works, what the benefits may be, and what tax considerations need to be taken into account.

 

How to Re-enroll in the Shell General Employee Share Purchase Plan

Historically, most employees at Shell enrolled once in the GESPP and then they were re-enrolled each and every year—but that’s not the way it’s going to work for 2019. Shell has changed the structure of the GESPP, which means if you want to participate, you must re-enroll.

 

Let me say that one more time. If you want to participate in the GESPP for 2019, even if you have been enrolled previously, you must re-enroll.

 

How soon do you need to re-enroll? Generally you need to re-enroll by the 15th of the month prior to wanting to start contributions. Remember all contributions to the GESPP are deducted from your payroll—similar to how it works for your Provident Fund.

 

To re-enroll (or sign up for the first time) go to ComputerShare. After enrolling for 2019, Shell should automatically re-enroll you for future years…well…as long as they don’t make any other changes to how the GESPP works.

 

What has Changed in the Shell General Employee Share Purchase Plan?

Wait the GESPP changed? How so?

 

The major change is that the contribution period has decreased from 12 months, January to December, to only 11 months, January to November, starting in the 2019 year. Overall, this is not a big deal, but it does require an adjustment to how we think about the tax ramifications of liquidating vested stock from the GESPP going forward. More on that topic below.

 

The other change is the contribution amount, which has historically been adjusted every year. Annual contributions are based on EUR 6,000. The U.S. dollar equivalent is set as of November 1 from the prior year. So, for 2019, EUR 6,000 is worth $6,827 as of November 1st, 2018.

 

Well, guess how that compares to last year…

 

Yup, the dollar has strengthened in value to the Euro compared to last year, which means– for U.S.-based employees– the amount they can contribute to the GESPP for 2019 has declined compared to what they could contribute in 2018.

 

 

 

 

 

 

 

 

The Price Advantage of the Shell General Employee Share Purchase Plan

The GESPP will likely give employees a discount on the purchase price compared to buying Shell stock on the open market. Specifically, the price advantage comes in two forms:

 

1) A discount from fair market value

2) A look-back provision

 

The GESPP offers a discount of 15% from the market price.

 

For example, if the price of Shell stock is $55.22, the GESPP allows for the purchase of shares at $46.94 per share—a 15% discount

 

The other price advantage is the lookback provision.

 

A look-back provision allows Shell to look at two dates, the offer, and the purchase date, and apply the discount to whichever is less.

 

Let us look at 2017 as an example. In 2017, Shell stock was valued at $55.22/share on the first trading day of the plan year (offer date), and $68.04/share on the first trading day after the end of the plan year (purchase date). The 15% discount is applied to the offer date price since it is the lower of the two.

 

Even though Shell stock declined intra-year beneath the $55.22 share price, it never neared the discount price of $46.94. The ability to look back in time and apply the discount to the lower of two price points is huge for participants in value add!

 

 

 

 

 

 

 

 

 

Receiving the Shares – Your Fidelity Individual Account

For US-based employees and residents, the vested shares are deposited into a Fidelity Individual account in your name at the end of January. (This is the same account you will receive Shell Performance Shares in if you are eligible.) Taxes are withheld by selling an appropriate amount of shares based on your supplemental tax rate to cover the GESPP discount. For most employees, the supplemental tax rate is 22%. You do not receive the benefit of dividend from the Shell stock prior to vesting (unlike Performance Shares), but you do receive dividends going forward once the shares have vested in your Fidelity account.

 

Once the shares have been deposited into your Fidelity Individual account, you can sell them at any point in time. But before you do, make sure you understand the tax ramifications!      

 

The Tax Advantage of the Shell General Employee Share Purchase Plan – A Qualifying Disposition

When you buy Shell stock through the GESPP, you use the after-tax dollar to make the purchase. So it naturally seems as if when you receive the Shell stock it should be tax-free, right? Wrong. The IRS views the 15% discount that you receive as a form of compensation. So, Shell will withhold taxes on the effective discount in stock from the purchase price.  

 

Upon selling the stock, you may owe taxes on the difference between the purchase price and the sale price. The tax rate you pay may be ordinary income, long-term capital gains, or a combination depending on whether you receive a qualified disposition or disqualifying disposition.

 

To receive preferential tax rates on the sale of proceeds from your GESPP, you must have a qualified disposition. To do so, you must meet the following rules:

 

1) The stock must have been held for at least one year from the original purchase date.

2) The stock must have been held for at least two years from the original offer date.

 

If a person meets these criteria, the discount received will be taxed as ordinary income, and the gain in excess of the discount will be capital gains.

 

For Shell, since the plan year changed from 12 months to 11 months, this now means you must hold the stock for 13 months from when the stock vests (shows up in your Fidelity account) before you can sell it if you want to receive preferential tax rates.

 

What Is a Disqualifying Disposition?

A disqualifying disposition is anything that is not a qualified disposition. All gains from the purchase price on the Shell stock will be taxed as ordinary income as opposed to a portion taxed at preferential long-term capital gains rates.

 

Depending on the size of the gain and your tax bracket, this could be a big tax hit or a small tax hit. To give some perspective the max investment ordinary income rate is 40.8% (including the 3.8% Medicare surtax on investment income) and the max long-term capital gains tax rate is 23.8%. That is a 17% difference!

 

Should Everyone Take Advantage of the GESPP?

We believe that most employees should plan on taking advantage of the GESPP. To some extent the discount and the ability to purchase at the lower of the two prices is similar to a company’s match to a 401(k)–it is like free money. Of course, there are always certain years and situations where the GESPP discount may not work out to due Shell stock movement, but we think that is unlikely.

 

There are situations where it may not make sense for an employee to participate in the GESPP, primarily due to cash flow concerns, but for most, it is a benefit you should plan to take advantage of.

 

If you are taking advantage of the GESPP you should make sure that you do not end up being over-concentrated in Shell stock. This is even more important if you are a recipient of Shell Performance Shares. If you have your job, your investments, your bonus, and your benefits all tied up in the success of one company, you may have a higher concentration of risk than you intended. Make sure you have a tax-efficient company stock diversification plan in place.

 

If you have further questions concerning your Shell GESPP, contact your advisor, or reach out to one of our Shell benefits specialists. 

 


Nick Johnson, CFA®, CFP®

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Nick Johnson believes that financial planning is more than numbers on a balance sheet and a standardized process. People are unique and should be treated as such.

 

As Vice President and Wealth Manager at Willis Johnson & Associates, his goal is to really get to know his clients, all the while providing a proactive approach to comprehensive wealth management.


 

Willis Johnson & Associates is a registered investment advisor. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Insurance products and services are offered or sold through individually licensed and appointed agents in various jurisdictions.

4 Tax-Efficient Ways to Gift Money This Holiday Season

December 19, 2018

Few people think about the holidays without thinking about the word “gift.” 

 

Most often, the word “gift” is associated with what you find in your stocking or under a tree after waking up Christmas morning. 

 

I often make the joke that Christmas presents get boring as I grow older because rather than asking for the new gaming console or my favorite player’s jersey, I’m asking for the little things: socks, gift cards to my favorite restaurants around town, etc.

 

However, I’ve also found myself asking for one big thing every year. That big thing being a little bit of money to invest, with the intention that I can one day use it to put a down payment on a house, buy my significant other a wedding ring (who, don’t get your hopes up, is not in the picture yet), or help pay for living expenses so that I can contribute additional money to my 401(K). This life transition is something I think we can all relate to as we grow older.

 

We see many of our clients gift in ways that can help provide for future generations and act as a short-term strategy that supplements their long-term estate planning goals. So, let’s take a look at some things you should be thinking about if you have additional money you would like to gift at the end of the year.

 

Gifting if You Are Over Age 70 ½ – Qualified Charitable Donations

If you’re over 70 ½, giving to charity directly from your IRA is one of the most tax-advantaged ways to meet charitable goals as it both counts toward your required distribution for the year and does not show up as income on your tax return. Rules You Need to Know to do an IRA Qualified Charitable Distribution

 

Tax-Efficient Gifting Strategies

Gifting if You Are Under Age 70 ½ – Bundled Deductions and Donor Advised Funds

Though not as tax advantageous, people under 70 ½ who feel charitably inclined should consider bundling deductions through a Donor Advised Fund, especially since the standard deduction is now quite a bit higher.  Bundling Deductions and Tax Savings: How to Take Advantage of Your Deduction Options

 

Gifting to Help Financially Support Future Generations

More often than not, people want to take care of the next generation and one day, the generation after that. Let us assume your loved one has children in the first few years of their career. It is likely that they are using most, if not all of their take-home pay for rent and living expenses, and are likely not maxing out their savings for retirement. You may consider talking to them about how they can use the money you gift as a proxy for their salary to fund the aforementioned living expenses and defer an amount close or equal to the sum of the gift toward their employer retirement plan. Maximizing the next generation’s ability to save in tax-deferred accounts like 401(k)s, Roths, and IRAs can be one of the best estate planning tools available.

 

Many years later, these individuals will most likely have stabilized financially and hopefully have the ability to fund their retirement and more.  Around that same time, they are probably looking to have children (meaning grandchildren for you). One of the ways to best assist with the new parents’ cash flow is by opening and contributing to a 529 plan for one’s grandchildren. The earlier, the better, as 529s act like a Roth in that they grow tax-free. Thus, your annual gift has reduced the burden of one generation’s cash flow while simultaneously afforded the next generation a greater chance of going to college and graduating with little to no student loan debt.

 

5 Questions You Should Consider When Using 529 Plans for Education

 

Did You Know You Can Now Use a 529 Savings Plan for Private School Education Costs (K-12)?

 

 

As we always tell our clients, it’s your money, and you choose how you want to spend it or gift it. If you want to gift your children the cost to cover a kitchen renovation or a new car, there is nothing wrong with doing so. This article serves not a guide on how you should make generational or charitable gifts, but an outline of how you can make these gifts in a way that is most tax beneficial. For more information regarding tax-efficient gifting strategies, contact your advisor, or reach out to the Willis Johnson & Associates team.

 


This image has an empty alt attribute; its file name is person1.jpgRobert (Bobby) Cope, M.S.

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Robert (Bobby) Cope joined Willis Johnson & Associates as a financial paraplanner in May of 2017. For Bobby, entering the financial planning profession allows him to not only assist the associate wealth managers of the firm in daily operations but more importantly assisting client’s in many other facets of their lives. Bobby graduated Summa Cum Laude from the University of Alabama Honors College in May of 2017.

 

He completed a dual degree program that awarded him an M.S. in Human Environmental Sciences, with a concentration in Family Financial Planning and Counseling, as well as a B.S. in Human Environmental Sciences, with a concentration in Consumer Sciences. At Alabama, Bobby was a member of Delta Kappa Epsilon social fraternity, as well as many other groups and honor societies on campus.
 

Willis Johnson & Associates is a registered investment advisor. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Insurance products and services are offered or sold through individually licensed and appointed agents in various jurisdictions. 
 
 

Shell Employees Can Save MORE in the Shell Provident Fund 401(k) in 2019

December 14, 2018

The IRS recently released the 2019 retirement plan contribution limits.

For super-savers at Shell, things are looking up. Here are a few of the most noteworthy changes:

 

–> Shell employees can now contribute up to $19,000 (or $25,000 for those over 50 years old) of pre-tax or Roth savings to the Shell Provident Fund. 

–> Shell’s limit on after-tax contributions has remained at $9,000, which means employees can contribute up to $28,000 (or $34,000 for those over 50 years old) to the Shell Provident Fund, between pre-tax and non-Roth after-tax savings.

 

How Shell Employees Can Make Tax-Efficient Retirement Plan Contributions

If you are contributing after-tax dollars to the Shell Provident Fund, remember to roll out the after-tax funds at least once annually to a Roth IRA so that you can take advantage of the mega backdoor Roth strategy.

 

Many Shell employees will be able to take advantage of higher contribution limits for backdoor Roths. With the IRA contribution limit now being $6,000 ($7,000 if over age 50), super-savers at Shell can put away $34,000 ($41,000 if over age 50) — between the Provident Fund and backdoor Roths– into tax-sheltered retirement accounts.

 

2019 Annual Compensation Limits and Strategic Saving for Shell Employees

The annual compensation limit for 2019 has increased from $275,000 to $280,000. If you make more than $280,000 in base and bonus compensation for 2019, remember to ensure that you max out your Provident Fund contributions before earning $280,000 of income. After you earn $280,000 of income, you can no longer contribute to the Provident Fund.

 

Shell contributes a 10% match to 401(k)accounts for employees that have been with the company over nine years. Since the annual compensation limit for 2019 is now $280,000, Shell will now cap company contributions to the Provident Fund at $28,000.

 

In 2019, once you begin earning more than $280,000, Shell will make their contributions to the Shell Provident Fund BRP (Benefit Restoration Plan) instead of to the Shell Provident Fund.

 

If 2019 is the first year you expect to make more than $280,000, check that you have an allocation and investment strategy set up for your Provident Fund BRP. The 2019 limit adjustments will be advantageous for super-savers at Shell and it is important to be sure that you make the most of these changes.

 

Willis Johnson & Associates will be working with our clients over the next few months to assist with adjusting contributions based on the new IRS rules. In 2019, we will follow up with clients who are eligible to take advantage of backdoor Roth IRAs to ensure they are on track for success. In the second half of the year–once these clients have reached their max contributions– we will help facilitate after-tax rollouts from their Provident Fund accounts.

 

If you have any questions about the 2019 contribution and compensation limits, please contact your advisor, or schedule a free consultation with one of our Shell specialists.

 


Alexis Long, MBA , CFP®

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Alexis Long is a wealth manager at Willis Johnson & Associates. For Alexis, financial planning combines an interest in producing detail-oriented financial plans with a desire to help people obtain their goals, ranging from retiring early, paying for their grandchildren’s educations, buying a second home or leaving a legacy for their children. 
Alexis earned her undergraduate degree in International Business from Texas Tech University and her Finance M.B.A. from the University of St. Thomas.

Willis Johnson & Associates is a registered investment advisor. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Insurance products and services are offered or sold through individually licensed and appointed agents in various jurisdictions.

2019 IRS Contribution Limit Adjustments: How Chevron Employees Can Save MORE in the Employee Savings Investment Plan in 2019

December 14, 2018

The IRS recently released the 2019 retirement plan contribution limits.

For super-savers at Chevron, things are looking up. Here are a few of the most noteworthy changes:

 

–> Chevron employees can now contribute up to $19,000 (or $25,000 for those over 50 years old) of pre-tax or Roth savings to the Employee Savings Investment Plan (ESIP).

–> Chevron’s limit on after-tax contributions has remained at $14,600, which means employees can contribute up to $28,000 (or $34,000 for those over 50 years old) between pre-tax and non-Roth after-tax savings to their 401(k).

 

How Chevron Employees Can Make Tax-Efficient Retirement Plan Contributions

If you are contributing after-tax dollars to the Chevron ESIP, consider rolling out the after-tax funds to a Roth IRA at the tail end of the third quarter to take advantage of the mega backdoor Roth strategy. For many Chevron employees that are contributing after-tax, the end of the third quarter is the best time to do the rollout because the Chevron ESIP freezes all contributions to the plan for 90 days afterward.

 

2019 Annual Compensation Limits and Strategic Saving for Chevron Employees

The annual compensation limit for 2019 has increased from $275,000 to $280,000. If you make more than $280,000 in base and bonus compensation for 2019, remember to ensure that you max out your ESIP contributions before earning $280,000 of income. After you earn $280,000 of income, you can no longer contribute to the Employee Savings Investment Plan.

 

Chevron contributes up to an 8% match to employee 401(k) accounts. Since the annual compensation limit for 2019 is now $280,000, Chevron will now cap out contributions to the ESIP at $22,400. In 2019, once you begin making more than $280,000, Chevron will be making their contributions to the Employee Savings Restoration Plan (ESIP RR) instead of the Employee Savings Investment Plan. If 2019 is the first year you expect to make over $280,000, check that you have an allocation and investment strategy set up for your ESIP RR.

 

In addition, many Chevron employees will be able to take advantage of higher contribution limits for backdoor Roths. Since the IRA contribution limit for 2019 is now $6,000 (and $7,000 for those over 50 years old), super-savers at Chevron can put away $34,000 (or $41,000 for those over 50 years old) between the 401(k) and backdoor Roths into tax-preferred retirement accounts.

 

The 2019 limit adjustments will be advantageous for super-savers at Chevron and it is important to be sure that you make the most of these changes. Willis Johnson & Associates will be working with our clients over the next few months to assist with adjusting contributions based on the new IRS rules.

 

In 2019, we will follow up with clients who are eligible to take advantage of backdoor Roth IRAs to ensure they are on track for success. At the tail end of the third quarter–once our Chevron clients who contribute after-tax savings to the Employee Savings Investment Plan have reached their max contributions– we will help  facilitate after-tax rollouts from their Chevron ESIP accounts.

 

If you have any questions about the 2019 contribution and compensation limits, please contact your advisor, or schedule a free consultation with one of our Chevron specialists.

 


Alexis Long, MBA, CFP®

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Alexis Long is a wealth manager at Willis Johnson & Associates. For Alexis, financial planning combines an interest in producing detail-oriented financial plans with a desire to help people obtain their goals, ranging from retiring early, paying for their grandchildren’s educations, buying a second home or leaving a legacy for their children. 
Alexis earned her undergraduate degree in International Business from Texas Tech University and her Finance M.B.A. from the University of St. Thomas.

Willis Johnson & Associates is a registered investment advisor. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Insurance products and services are offered or sold through individually licensed and appointed agents in various jurisdictions.

2019 IRS Contribution Limits Allow BMC Employees to Save More in the Savings & Investment Plan

December 14, 2018

The IRS recently released the 2019 retirement plan contribution limits.

For super-savers at BMC Software, Inc., things are looking up. Here are a few of the most noteworthy changes:

 

–> BMC employees can now contribute $19,000 (or $25,000 for those over 50 years old) of pre-tax or Roth savings to the BMC Software, Inc. Savings and Investment Plan.

 

How BMC Employees Can Maximize Their Retirement Plan Contributions

It’s important to ensure that you are contributing at least 5% of your pay every pay period to receive the full 5% company match. At BMC, it is easy to miss the opportunity to receive the company contributions, so make sure you do the math every year! A great resource to assist you is the BMC 401(k) Deferral Calculator.

 

2019 Annual Compensation Limits and Strategic Saving for BMC Employees

The annual compensation limit for 2019 has increased from $275,000 to $280,000. If you make more than $280,000 in base and bonus compensation for 2019, remember to ensure you max out your BMC 401(k) contributions prior to earning $280,000 of income. After you earn $280,000 of income, you can no longer contribute to the 401(k).

 

In addition to the $19,000 of pre-tax or Roth contributions, BMC also allows employees to contribute non-Roth after-tax savings to the BMC Software, Inc. Savings and Investment Plan. If you make $280,000 or more annually, you can contribute up to $23,000 in additional after-tax savings. If you contribute over $23,000, you may reduce the amount of money BMC puts in the plan on your behalf. Lastly, if you are contributing after-tax dollars to BMC’s 401k, remember to roll out the after-tax funds at least annually to a Roth IRA to take advantage of the mega backdoor Roth strategy.

 

In addition, many BMC employees will be able to take advantage of higher contribution limits for backdoor Roths. With the IRA contribution limits now $6,000 (and $7,000 if over age 50), it means super-savers at BMC can put away $48,000 (or $55,000 if over age 50) between the BMC 401(k) and backdoor Roths into tax-preferred retirement accounts.

 

The 2019 limit adjustments will be advantageous for super-savers at BMC and it is important to be sure that you make the most of these changes. Willis Johnson & Associates will be working with our clients over the next few months to assist in adjusting contributions to ensure they get the full 5% company per paycheck match.

 

In 2019, we will follow up with clients who are eligible to take advantage of backdoor Roth IRAs to ensure they are on track for success. We will help facilitate after-tax rollouts from the 401(k) in the second half of the year once contributions have been maxed.

 

If you have any questions about the 2019 contribution and compensation limits, please contact your advisor, or schedule a free consultation with one of our BMC specialists.

 


Tyler Baker, CFP®

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Tyler Baker is an associate wealth manager at Willis Johnson & Associates.Tyler enjoys guiding individuals and their families through the financial planning process, and he specializes in uncovering new opportunities that work to minimize client expenses, while increasing their savings. Tyler graduated from the University of Georgia with two degrees, a Bachelor of Science in financial planning, and another in housing management and policy. 


 

Willis Johnson & Associates is a registered investment advisor. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Insurance products and services are offered or sold through individually licensed and appointed agents in various jurisdictions.

The Markets (as of market close November 30, 2018)

December 4, 2018

The Markets (as of market close November 30, 2018)

 

November proved to be a very volatile month for stocks.

 

By the third week of the month, the benchmark indexes listed here had given back just about all of the gains accumulated during the year. However, a spurt during the last week of November helped push stocks higher by the end of the month. Each of the indexes listed here outperformed their October end-of-the-month closing values, led by the large caps of the S&P 500 and the Dow, followed by the Global Dow and the small caps of the Russell 2000. The technology stocks of the Nasdaq edged higher by the close of November, and that index still maintains a sizeable lead year-to-date among the indexes listed here. 

 

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

 

Nevertheless, investors head into the last month of the year anxiously, as fears of a slowing economy and growing international trade tensions will likely temper expectations for steady stock gains moving forward. Energy stocks have been hit by falling oil prices, and the yield on 10-year Treasuries fell below 3.0% as bond prices rose after the Federal Reserve chairman intimated that interest rates may not be increasing as aggressively as previously thought… Click here to read the full article. 

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