Notes from a Social Distance

Ann C. Alsina, CLU®, CFP® | March 26, 2020

If you're watching the news, you've probably seen that the market is up so far this week. Investors have reacted positively to the expected stimulus bill, buying back into the market. We're still down from the record highs set earlier this year -- we are back to about first-quarter 2017 levels.

I can give you all kinds of historical research showing that the market will bounce back. It's just hard to digest when your stomach is somewhere above your eyeballs. Which means, as scary as the ride is, the best thing to do is close your eyes and hold on tight to the handle bar. We'll get back to the station okay.

If you're the type to throw your hands in the air and scream through the roller coaster ride, here's some positive steps you can take:

Keep contributing: If you have not been affected financially, please keep investing in your 401(k), 403(b), TSP, IRAs. You are buying more shares of your investments with each contribution than you were a few weeks ago. Buying low feels awful, sort of like eating cold, mushy green beans. It's still really good for you.
Partial Roth conversions: Even though the market has rebounded somewhat, it is still a good time to consider a partial conversion. This moves pre-tax money from a traditional IRA or 401(k) into a post-tax Roth account. In retirement, Roth accounts are not subject to required minimum distributions, and distributions are not taxed. There are no income limits, and a conversion does not affect contribution limits. Be sure to check with your tax advisor first as this is a taxable event.
Contribute for 2019: The tax filing deadline has been pushed to July 15, and so has the contribution deadline. You can contribute to your IRA for 2019 until the new deadline. If you need to have your taxes prepared, we are still processing returns.
Get your estate plans in order: We always recommend sitting down with an estate attorney to have your will and other legal documents prepared; however, in this crazy time, if you haven't done that, consider starting with your state's Power of Attorney and Medical Directive forms. The Power of Attorney (POA) allows someone to make financial decisions for you if you are unable. The Medical Directive gives someone permission to make medical decisions, and also provides guidance for end-of-life decisions. You can access the Maryland POA form here, and the Medical Directive here.

Still confused, worried, concerned? You are not alone. Call or email us any time. We're here to help.

This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax situation with a qualified tax advisor.

Traditional IRA account owners should consider the tax ramifications, age and income restrictions in regards to executing a conversion from a traditional IRA to a Roth IRA. The converted amount is generally subject to income taxation.

This information is not intended to be a substitute for individualized legal advice. We suggest that you discuss your specific situation with a qualified attorney.

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