9 smart planning moves to consider
1. Review your income or portfolio strategy. Are you reaching a milestone in your life such as
retirement or a change in your personal circumstances? Has your tolerance for taking risk
changed? If so, let’s make adjustments to your financial plan.
When stocks tumble, some investors become very anxious. When stocks post strong
returns, others feel invincible and are ready to load up on riskier assets.
Remember, the financial plan is your roadmap to your financial goals. It is designed to
remove the emotional component that may encourage us to buy or sell at inopportune
times. In other words, be careful about making portfolio decisions based solely on market
Long-term academic data and my own personal experience tell me that the shortest
distance between an investor and his/her financial goals is adherence to a well-diversified
holistic financial plan. Keep in mind that diversification does not ensure a profit or
guarantee against a loss.
2. Rebalance your portfolio. Stocks have performed well this year. Depending on your
individual situation, we may need to trim back on equity exposure. However, if necessary,
we may want to wait until January in non-retirement accounts so that any gains are booked
in tax year 2022. Rebalancing a non-retirement account could be a taxable event that may
increase your tax liability.
3. Take stock of changes in your life and review insurance and beneficiaries. Let’s be sure you
are adequately covered. At the same time, it’s a good idea to update beneficiaries if the
need has arisen.
4. Note the tax loss deadline. You have until December 31 to harvest any tax losses and/or
offset any capital gains. It may be advantageous to time sales in order to maximize tax
benefits this year or next. We may also want to book gains and offset with any losses.
But be aware that short- and long-term capital gains are taxed at different rates. And don’t
run up against the wash-sale rule (see IRS Publication 550), which could disallow a capital
A wash sale occurs when you sell a security at a loss and then purchase that same security
or “substantially identical” securities within 30 days, either before or after the sale date
Did you know that you pay no federal taxes on a long-term capital gain if you reside in the
10% or 12% federal income tax bracket? It may be worth harvesting a long-term capital
gain. In other words, you may sell the stock, take the profit, and pay no federal income tax.
But be careful.
The sale will raise your adjusted gross income, which means you’ll probably pay state
income tax on the long-term gain. By raising your AGI, you could also impact various tax
deductions or receive a smaller ACA premium tax credit if you obtain your health insurance
from the Marketplace.
5. Mutual funds and taxable distributions. This is best described using an example.
If you buy a mutual fund on December 15 and it pays its annual dividend and capital gain on
December 20, you will be responsible for paying taxes on the entire yearly distribution,
even though you held the fund for just five days.
It’s a tax sting that’s best avoided because the net asset value hasn’t changed. It’s usually a
good idea to wait until after the annual distribution to make the purchase.
6. Required minimum distributions (RMDs) are minimum amounts the owner of most
retirement accounts must withdraw annually.
The SECURE Act made major changes to RMD rules. If you reach age 701⁄2 in 2020 or
later, you must take your first RMD by April 1 of the year after you reach 72 (irs.gov:
Retirement Plan and IRA Required Minimum Distributions FAQs). Some plans may
provide exceptions if you are still working
If you reached the age of 701⁄2 in 2019 the prior rule applies.
For all subsequent years, including the year in which you were paid the first RMD by
April 1, you must take the RMD by December 31.
While delaying the RMD until April 1 can cut your tax bite in the current year, please be
aware that you’ll have two RMDs in the following year, which could bump you into a
higher tax bracket.
The RMD rules apply to all employer-sponsored retirement plans, including profit-
sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans. The RMD rules also apply to
traditional IRAs and IRA-based plans such as SEPs, SARSEPs and SIMPLE IRAs.
They do not apply to ROTH IRAs.
Don’t miss the deadline or you could be subject to a steep penalty. RMD’s are generally
subject to federal income tax and may be subject to state taxes. Consult your tax
advisor to assess your situation.
7. Contribute to a Roth IRA or traditional IRA. A Roth gives you the potential to earn tax-
free growth (not just deferred tax-free growth) and allows for federal-tax free
withdrawals if certain requirements are met.
You may also be eligible to contribute to a traditional IRA. Contributions may be fully or
partially deductible, depending on your income and circumstances. Total contributions
for both accounts cannot exceed the prescribed limit.
There are income limits, but if you qualify, the annual contribution limit for 2020, 2021
and 2022 is $6,000, or $7,000 if you’re age 50 or older. (irs.gov)
You can contribute if you (or your spouse, if filing jointly) have taxable compensation.
Starting in 2020 and later, there is no age limit on making regular contributions to
traditional or Roth IRAs.
As of now, you can make 2021 IRA contributions until April 15, 2022 (Note: statewide
holidays can impact final date).
8. College savings. A limited option called the Coverdell Education Savings Account (ESA)
allows for a maximum contribution of $2,000. It must be made before the beneficiary
turns 18. Contributions are not tax deductible.
Distributions are tax free if used for qualified education expenses. But beware of income
limits (irs.gov: Coverdell Education Savings Accounts).
Contribution limits are phased out if the contributor has an AGI of $95,000 to $110,000.
For joint filers, the AGI is between $190,000 to $220,000.
A 529 plan allows for much higher contribution limits, and earnings are not subject to
federal tax when used for the qualified education expenses of the designated
As with the Coverdell ESA, contributions are not tax deductible.
9. Charitable giving. Whether it is cash, stocks or bonds, you can donate to your favorite
charity by December 31, potentially offsetting any income.
Did you know that you may qualify for what’s called a qualified charitable distribution
(QCD) if you are 701⁄2 or older? (irs.gov)
A QCD is an otherwise taxable distribution from an IRA or inherited IRA that is paid
directly from the IRA to a qualified charity.
A QCD may be counted toward your RMD up to $100,000. If you file jointly, you and
your spouse can make a $100,000 QCD from your own IRAs. This becomes even more
valuable in light of tax reform as the higher standard deduction may preclude you from
You might also consider a donor-advised fund. Once the donation is made, you can
generally realize immediate tax benefits, but it is up to the donor when the distribution
to a qualified charity may be made. Donors are urged to consult their attorneys,
accountants or tax advisors with respect to questions relating to the deductibility of
various types of contributions to a Donor-Advised Fund for federal and state tax
I trust you’ve found these planning tips to be helpful, and we are always here to assist. Please
feel free to reach out if you have any questions or you may check in with your tax advisor.
A sharp acceleration in economic growth, increasing worries about inflation, a reluctant-to-act-
against-inflation Fed, and a strong stock market were quickly displaced by news of the new
Covid variant on Black Friday.
Table 2: Key Index Returns
Source: Wall Street Journal, MSCI.com, MarketWatch, Bloomberg
MTD returns: Oct 29, 2021-Nov 30, 2021
YTD returns: Dec 31, 2020-Nov 30, 2021
**in US dollars
MTD % YTD %
Dow Jones Industrial Average -3.7 12.7
NASDAQ Composite 0.3 20.6
S&P 500 Index -0.8 21.6
Russell 2000 Index -4.3 11.3
MSCI World ex-USA** -4.8 4.9
MSCI Emerging Markets** -4.1 -6.1
Bloomberg US Agg Total Return 0.3 -1.3
Dubbed Omicron and a variant of concern by the World Health Organization, the just-named
variant first spotted in South Africa sent shudders through global markets on Black Friday.
Of course, it is not the first variant to trouble the world. Covid cases have spiked with the highly
contagious Delta variant already.
The Alpha variant spread into the U.S. early in the year but is of less concern today. The Beta,
Gamma, Epsilon, Eta, Lambda, Mu and other variants have not caused much concern among
investors amid the growing use of vaccines and therapeutics.
This is critically important to the economy and investors, as these tools have been used in place
of economically destructive lockdowns and social distancing restrictions.
It’s not that they eliminate all danger of infection completely. They don’t. But lockdowns and
various restrictions had been the preferred tool for government officials.
That said, Omicron is a not-so-subtle reminder that the ever-changing pandemic remains a
health threat. And the recent market volatility stems from worries over the new variant’s
unknown impact on the global and U.S. economy.
That volatility appears to be brought on by its apparent ease of transmission and anxieties that
current vaccines and therapeutics may be less effective against Omicron. But early reports
suggest milder symptoms. (cnbc.com)
However, I must stress that these are early reports, and little is known about the new variant.
Perhaps, the latest volatility could subside if additional bad news isn’t forthcoming, or updates
to vaccines and treatments prove to be effective.
Let me also add that FedSpeak at the end of November intensified selling.
“At this point, the economy is very strong and inflationary pressures are higher, and it is
therefore appropriate in my view to consider wrapping up the taper of our asset purchases…
perhaps a few months sooner,” Fed Chief Jerome Powell said November 30 before a Senate
In early November, the Fed said it would begin tapering its $120 billion in monthly bond
purchases by $15 billion per month in November and again in December. Economic conditions
would dictate the pace in 2022.
Though inflation has been stubbornly high, the Fed has been slow to react. As we enter
December, Powell has opened the door to a faster taper, which could advance the Fed’s timing
of its first rate hike.
I trust you’ve found this review to be educational and helpful. Once again, let me gently remind
you that before making decisions that may impact your taxes, you may want to consult with
your tax advisor.
If you have any questions or would like to discuss any matters, please feel free to give me or
any of my team members a call.
As always, I’m honored and humbled that you have given us the opportunity to serve as your
On behalf of everyone here at Eagle Capital Advisors, we wish you and your family a Merry
Christmas and a Happy New Year.
William Y. Rice III, CPM® | Eagle Capital Advisors
Founding Partner, Managing Director & CEO, ECA
Wealth Advisor, RJFS
140 E Tyler Street, Suite 240; Longview, TX 75601
T: 903.236.5300 | F: 903.236.5357
Eagle Capital Advisors is not a registered broker/dealer, and is independent of Raymond James Financial Services.
Investment advisory services offered through Raymond James Financial Services Advisors, Inc.
The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and
reviewed by the editors of the Wall Street Journal. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Russell
2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the
total market capitalization of the Russell 3000 Index. The MSCI ACWI ex USA Investable Market Index (IMI) captures large, mid and small cap
representation across 22 of 23 Developed Markets (DM) countries (excluding the United States) and 24 Emerging Markets (EM) countries*.
With 6,211 constituents, the index covers approximately 99% of the global equity opportunity set outside the US. The MSCI Emerging Markets
is designed to measure equity market performance in 25 emerging market indices. The index’s three largest industries are materials, energy,
and banks. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US
dollar-denominated, fixed-rate taxable bond market. The information contained in this report does not purport to be a complete description of
the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be
reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of William Y. Rice III and not
necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee
that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss
regardless of strategy selected. Keep in mind that individuals cannot invest directly in any index, and index performance does not include
transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Past performance does
not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.
Contributions to a traditional IRA may be tax-deductible depending on the taxpayer’s income, tax-filing status, and other factors. Withdrawal of
pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal
tax penalty. Like Traditional IRAs, contribution limits apply to Roth IRAs. In addition, with a Roth IRA, your allowable contribution may be
reduced or eliminated if your annual income exceeds certain limits. Contributions to a Roth IRA are never tax deductible, but if certain
conditions are met, distributions will be completely income tax free Matching contributions from your employer may be subject to a vesting
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As you embark on your wealth management journey, you may wonder whether financial advisors truly add value to your investments. By answering these five essential