One of the positives of having your birthday in mid-January is it gives you the opportunity to reflect back on the prior year (after the hoopla of the Holiday Season and Best of Lists has worn off of course) while simultaneously appreciating the benefit of being a year older and more mature to plan for the year ahead. Let’s not also forget the other positive being January provides good weather for napping. I really should change my birthday to the sunny days of mid-July!

Heading into 2019, financial markets were on edge and the year ahead looked treacherous. Prognosticators were predicting doom and gloom and signs of the Big R-word (Recession) were flashing. Social and political crises were aplenty. Nevertheless, 2019 proved to be a wonderful year for investment returns. As famous Fidelity fund manager, Peter Lynch, said, “More people have lost money anticipating (market) corrections than in actual corrections.”

2020 brings not only hope and a renewed sense of purpose but also a new law pertaining to taxes and estate planning. The Setting Every Community Up for Retirement Enhancements (SECURE) Act became effective on January 1, 2020 and brings some major changes to 2020 planning and beyond. Some of the highlights:

  • Age to Begin Required Minimum Distributions (RMDs) – if you turn 70 ½ after 1/1/2020, then first RMD is delayed till the year you turn 72. Under the previous rules, RMDS started in the year you turned 70 ½.
  • Elimination of the “Stretch IRA” for Beneficiary of IRAs and Retirement Plans – If you are a non-spouse beneficiary of IRA/Roth IRA/Other Retirement Plan then you must deplete the entire account balance by 12/31 of the 10th year of original participant’s passing. Exceptions are still in place for spouses, minors, disabled individuals and beneficiaries less than 10 years younger than the original participant. Under the previous rules, non-spouse beneficiaries could take distributions based over their life expectancy and “stretch” the distributions. This provision will be a major area of planning since the facts of your finances and potentially your children/grandchildren will need to be reviewed. Does a Roth Conversion make sense?
  • Traditional IRA Contribution Age – no longer any age limit to make an IRA contribution as long as the account owner has earned income. Under the previous rules, the year account owner reached 70 ½ was the limit.
  • Penalty-Free Withdrawals for Birth or Adoption Expenses – up to $5,000 can be withdrawn penalty-free from a retirement plan or IRA to cover birth or adoption expenses. However, the account owner still has to pay ordinary income taxes on the withdrawal. Under the previous rules, a 10% penalty on the distribution applied.
  • Additional 529 Plan Eligible Expense – 529 Plan funds can always be withdrawn tax-free to pay for qualified higher education expenses, and now, up to $10,000 over your lifetime can be withdrawn to pay down student loans. Important to note in 2018, a law passed allowing up to $10,000 per year to be used towards K-12 educational expenses.
  • Annuities in 401(k) Plans – more employers will offer annuities via retirement plans

While much is still to be determined on how the SECURE Act impacts each of us, one thing is certain and that is we are here to discuss it with you. Looking forward to another exciting year!

Blockchain Technology is in general, a digital ledger that can record a plethora of different information. The information is decentralized, often anonymous and public. The information (often transactional) then cannot be changed or fondled with retroactively or proactively, without the alteration of all previous bits of information. In layman’s terms, it is the most hack-proof, mistake-proof and hinderance-proof way to keep, track and use information in many different areas and industries.

Blockchain Technology is the next big thing in many industries and sectors. It is a trend that has solidified its position as the up-and-comer and is becoming a standing topic in discussions about the future. The Financial Industry is a leader in applications of all Fin-Tech trends, and that translates to the Blockchain technology as well. 2020 is the year that we will be seeing Blockchain Technology gain a lot more foothold in the industry and start to tie in the different uses for the technology into a more streamlined process. Below are some predictions / projections for 2020:

  • Most Blockchain startup companies and processes will fail – As the technology is not even fully understood, let alone embraced and implemented in most industries, there will be a lot of fails and missed marks on a lot of new projects. Investors will need to be weary of this and extra cautious of investing.
  • Financial Industry will continue to lead Implementation – After the safety and anonymity of crypto-currencies were implemented, the financial industry started to review and research possible implementations. It is easiest for the banking system and most beneficial to implement the security of blockchain technology to increase safety and speed of transactions. It is estimated that a staggering 77% of all Financial Institutions (In Developed Nations) will utilize Blockchain technology in at least a part of a process in 2020.
  • National Crypto-Currencies will start popping up – Venezuela already has a crypto-currency backed by the mineral and oil reserves of the nation. Sub-Westernized countries like Russia are also considering their versions of crypto-currencies.
  • Blockchain technology will grow exponentially in sectors where secure financial presence is a must. We will likely see large growth in sectors such as banking and financial services. The technology will be able to protect the anonymity of the transactions as well as the sensitive information involved.
  • Legality / lawmaking will start to catch up and cover blockchain technologies and their hosts. This will have to be a stepping stone before the point above can be put into action: no legitimate company would incorporate an unregulated technology into providing a regulated service (i.e. financial advice, banking services, etc…).

Overall, we have a lot to look forward to in 2020 for this new technology, and even though it may not be market-ready for anything major or even noticeable yet, its time will come and 2020 will bring forth large steps toward a united and secure blockchain world.