FUNDS. Another piece on high yearend CG distributions. (This piece by Lauren Foster seems to be based on a longer piece by
@LewisBraham in the Guide to Wealth supplement, see below)
INCOME from EM dividend-stocks – CEMDX / CEMIX with holdings in Brazil, China, Greece, Mexico.
RETIREMENT. The good news is that Americans have $39 trillion in RETIREMENT ACCOUNTS. But the bad news is that only 54.3% have defined-contribution (DC) retirement accounts, 13% have traditional defined-benefit (DB) pensions, and accounting for overlaps, that leaves lots of Americans without ANY retirement funds beyond Social Security (1935- ). The average balance in DC accounts is only $86K. In the very old days, people worked until they died. Pensions were a creation of Industrial Revolution to make room for younger employees by luring older workers to “retire”, and the first retirement fund was by American Express in 1875. It didn’t catch on right away, and then the Great Depression came (1930s), and the SSA was created. Employees liked old pensions, but employers saw them as growing liabilities. According to the father of 401k, Ted BENNA, 401k was by accident from the short 869-word section (subtitled 401k) in the 1978 revenue Act that allowed pretax employer and employee contributions for retirements (unclear who slipped that in). Companies caught on to this quickly, and by 1983, there were already 7.1 million 401k accounts, now 60 million accounts. The great shift from old pensions to 401k/403b also started. But 401k/403b aren’t perfect, and while auto-signups and auto-escalations have helped, that hasn’t been enough (especially for lower-income and self-employed groups and small businesses). (By Kenneth Pringle who has authored some great historical pieces)
Supplement, GUIDE TO WEALTH.
Yearend tips for portfolios: Max 401k/403b, make IRA contributions and/or Roth conversions, payoff high-rate debt, deploy some tech profits into bonds, rebalance if far from targets, consider alternatives, keep cash in higher-rate money-market funds. Some stock and bond ideas are also included.
Several high 2023 yearend mutual fund distributions are mentioned: IYVAX, KLCKX, FMXKX, CREEX, DHSCX, JPDEX (tax-aware!), BTIIX (SP500!). Heavy outflows and/or manager change are reasons. The ETFs avoid this problem due to their tax-efficient design. There are also direct-indexed accounts that can do TLH; some of these accept mutual funds (in-kind) that they can slowly adjust with TLH. Mutual fund holders with huge CG distributions may also sell them ahead if their unrealized gains are not large. For individuals, excess TLH net losses beyond $3K/yr offset of ordinary income can be carried over to future years. Tax issues don’t matter in tax-deferred/free accounts. Charitably inclined may contribute highly appreciated securities to DAFs or directly to charities (but one has to itemize to claim charitable deductions). (By
@LewisBraham at MFO)
Top yearend ideas from 5 financial pros:
Cheryl HOLLAND/Abacus: Family talks about finances around holidays.
Patrick FRUZZETI/Rose-Hightower: TLH, QCDs, CRTs from IRAs, DAFs.
Matthew SPRADLIN/Godfrey & Spradlin-Steward Partners: 529s – split w/spouse to max state tax benefits; use 5-yr forward for 5x annual contributions (but cannot contribute more for 5 years), individual 401k for proprietors.
Indrika ARNOLD/Colony Group: Gifting with purpose – it’s a good feeling when gift recipients benefit from gifts while you are around.
Mark MUMFORD/Hollow Brook: TLH, gifts.
LINKThose interested may also check the International Roundtable in
Part 1.
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