Category Archives: Retirement Planning

Eight Weeks left in 2023… Wow… That was Fast …. Great Time of the Year to Check Run Rate of Contributions to Retirement Plans or the Like, Here are the Numbers of where we should be!

Today is November 6, 2023….Would you believe there are only EIGHT full weeks left in the year? In some ways we do, others it seems like we just turned the calendar….digressing…


Great time to review your contribution levels

Now is a good time for all of us to review our retirement contribution levels. If our intent is to max out your 401(k), or other retirement plan, take a peek and see if you’re on track to achieve this goal.



If you have any questions certainly shoot us your latest paycheck and we can do the calculations, but here are roughly where we should be on our contributions to the regular and catchup 401(k) levels.


Ideally your year to date (YTD) contribution levels for your 401(k) regular withholding by yourself should be at least $19k in order to meet the $22.5k regular filing maximum by the end of the year and if our goal is to achieve the $30K catchup for those 50 and older we should be at least at the $25k level today. Both of these should be our individual YTD withholding amounts. We know there are matching and employer contributions … but the rules are set for us as an individual at the $22,5k regular maximum and $30k catch-up maximum. Catch ups are the usual problems, so make sure if you are 50 or turning 50 this year, your employer knows you want to do a catch up contribution!

Two quick reminders… if you have changed employers it is our job to keep up with the maximum amounts as mentioned here because our new employer will not know our prior contributions…

There are variances in certain situations, most of which we have already discussed, but the above covers the great majority of plans …. Reach out if you are in the middle for some reason!

This is your friendly reminder!

Reach out if Question… We got you!

Have a Great “Retirement Run Rate” Reminder Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

2024 Preview of New contribution limits (Tiny Increase?) … Clients/Clients Only Post Merger RMD’s … Time Change We think ?? YEP!

What inflation? According to the IRS… Certainly not going to argue with a raise, but WOW is it tiny!

From this IRS press release on Nov 1, 2023:

Highlights of changes for 2024

The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan is increased to $23,000, up from $22,500.

The limit on annual contributions to an IRA increased to $7,000, up from $6,500.

Those of us watching…. that is a total $500 increase…. oh well… will plan accordingly…. but expect more from us on this as we dig deeper….

Clients/Clients Only RMD Reminder Confusion from the Merger

Post Merger, our new vendor Schwab does not know the RMD taken prior to the merger…. just ignore the information for this year from them… we have your back on this and have planned accordingly!

Time Change? Maybe…..Yes…. No …. Yes?

Did any of you hear rumblings of no future dumping of daylight savings last year? And even some legislation….

Ahhhh HA! From the Sleep Foundation: YEP they are changing!

Key Takeaways

  • Clocks will “fall back” one hour at 2 a.m. local time on Sunday, November 5, 2023.
  • Federal law still prohibits states from enacting permanent daylight saving time (DST).
  • Proposed legislation to change federal law, such as Senator Marco Rubio’s Sunshine Protection Act, has stalled in 2023 despite gaining momentum in 2022.
  • Dozens of states continue to consider proposals to adopt either permanent daylight saving time or permanent standard time. Yet, no states have adopted a legislative change in 2023.
  • Without new movement on proposed changes, Americans should expect clock changes to continue into 2024.

More fun travels next week…. Happy Friday and have a good weekend – Talk Next Week!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Third Quarter 2023 Review, Participation, Rates, Political Season, Seasonality !

Have you ever had some type of team that you follow, could be sports related or the other, that has a pretty good record, seems to be doing well on the surface, but when you look a little closer it becomes apparent that this team is dominated by the performance of just a very few individuals?

Participation or lack there of

There are a lot of similarities in the above analysis to the current capital market environment. Just like the vulnerability of your favorite team, should some of those dominant forces not perform well or heaven’s, even worse, get injured, the real truth will begin to reveal itself.

Capital markets that are thinly led can have distinct vulnerabilities. On a positive side many of the players can catch up to give greater participation. An optimistic outcome. On the negative side just like our team, should some of those more important subjects falter, reality may sink in.

Interest Rates

As mentioned in our Q4 Newsletter, higher interest rates are the tone of the times currently. Our lead article talks about the tremendous positives that higher interest rates have on pensions in the form of higher fixed income earnings. In the very short term, it is a headwind for fixed instruments, but over the long term safer, steadier, and more normalized expected returns.

Political Season Already

While it only seems like yesterday when we had a presidential election, it is hard to believe that next year, approximately this time of the year, we will have another. Recall, there will be many headlines associated with the political process, many of them possibly frightening. You know that we are careful to comment on headlines and things that have not become law, but nevertheless the frightening headlines may appear. Just remember there is a difference between a desire, speaking, debating, and a law.

Positive Seasonality Headwinds

Looking forward to the final quarter of the year, just as it gets cooler in most parts north of the equator, capital markets tend to have positive historical reference. While we are always careful to say this time is different, the Federal Reserve, if resolute in their desire, have both feet firmly pressed on the economic brakes, and as of yet have not been successful in achieving their goals.

Sincerely,

John A. Kvale CFA, CFP

Enclosure (2023 Report)

Reminders of Important “Line in the Sand” Age-Related Dates that have Recently Changed …

This is an abbreviated article coming in the Q 4 2023 Newsletter … Important enough, we wanted to have its’ own airtime for future reference and emphasis.

The Secure Act 2.0 completed in very late 2022 made adjustments to many age-related “Line in the Sand” important dates as well as some other peripheral and yet undetermined information.

RMD (Required Minimum Distributions)

One of the most important and likely most confusing due to the recent multiple updates is the adjustment of Required Minimum Distributions (RMD) They are now mandatory to commence for those aged 73. Those turning 75 after 2033, your new RMD age is 75.  Recall, these just a few years ago, moved from age 70 1/2 to 72, now to age 73 and eventually age 75. No wonder we are all confused!

Bottom line, current earliest required minimum distribution is age 73 until the next scheduled change, if not sooner, in 2033.

RMD Practice Reminder – While you may have many different IRA type of accounts (consolidating is always best, but not always possible) you need only take your mandatory RMD amount in total, no matter the account(s) they come from. Said another way, Uncle Sam does not care which accounts your RMD’s come from, as long as you take the minimum amount needed, as he really wants in taxes on those untaxed funds.

Social Security Mandatory Commencement Date reminder age 70

With 75 being the new 65 it is not surprising that many people are choosing to work longer, happily and healthily adding to society in a peak knowledge chapter, and pushing their Social Security commencement day off accordingly. There are many reasons to start Social Security early, on your full retirement age, or wait until that last possible moment. The current maximum age that you may defer commencement of  Social Security still remains at age 70, well below the new younger thresholds that we hopefully are all feeling. 

The earliest one may take Social Security remains age 62, with a 25% discount to the full retirement age (FRA) benefit amount AND has a maximum earnings level of $21,240 from W-2 or 1099 (working income) not pension, investment or other non working types of income.  

Have a Great “Less Confused Important Age Date Reminders” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Really Good News about Higher Interest Rates, Huh? Pension Plans are Funded… Likely No More Lump Sum Offers… Finally Ok to Talk about, Copyright Approved …

We ran across terrific information from Milliman– the bulk of our analysis comes from the following fantastic White Paper:

2023 Corporate Pension Funding Study

By Zorast WadiaAlan Perry, and Richard J. Bottelli Jr.

With Copyright approval just this Monday – we can finally bring this great information to you- yay

While it may seem like we talk about interest rates and their effects constantly,  there are very few things especially in the shorter term that effect an economy more and therefore economic growth and capital markets.

Good News for Pension Plan Owners and Recipients

In this higher interest rate environment, we have some really good news for not only pension plan recipients but the owners of pension plans as well. Higher interest rates help pension plan funding (see periodic table looking chart for the top 100 pension plans), in the forum of what’s called smaller present value obligations (PBO). While we understand the calculus of this equation it’s far too difficult to explain in this context but from a very high level, higher interest rates the effect of computation of PBO and the higher the rates, the lower the funding amount needed.

Said another way, pension plans generally hold large amounts of bonds and bonds are earning more now.

By taking a look at figure 3 from the fantastic white paper of Milliman, it’s easy to see that in 2007 the slashing of interest rates to levels never seen before caused a dramatic loss in pension plan funding. Not only did this funding drop but again by referencing the chart it’s easy to see that this was almost a 1 1/2 decade hurdle that pension plans fought against to regain their funding level.

Fast forward to today, again our Chart 3 favorite, shows pension plans are making a strong comeback in their obligations and with interest rates higher look to be fantastically and happily funded. This should be comforting to corporate pension plans (again looking to our periodic chart for those) that likely are breathing easier, and this should also be comforting from those pension plan recipients that maybe had concerns on the long term funding ability of their plan.

Given the full funding of Pension plans, we would infer the lump sum window may be closed! Those lucky enough to have offers over the last decade and a half, well done!

Have a Great “Funded Positive Interest Rates Pensions” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

As expected (but were starting to worry) IRS FINALLY Punts on a hurried rule (Part of Secure Act 2.0) by pushing it out to 2026… Whew – Income Related Roth Mandate for Retirement Catchup is Pushed out…. Too Sketchy to Implement …

The Secure Act 2.0 signed into law at dark 30 in December 2022 included a very confusing, ambiguous, and unimplementable as written rule, that mandated incomes over certain levels would not be allowed to make tax deductible catch up contributions to pre-tax plans… i.e. 401ks…and if desired would need to contribute catch up contributions to Roth – After tax contributions…

Last Friday, August 25, 2034 at 2:41 PM the following email hit the cell inbox-

Sketchy Roth Mandate Pushed to 2026

As mentioned above the Secure 2.0 included a poorly written rule mandating an income thresh hold for pre-tax catch up contributions…..

Without getting into the weeds, the law was written so hurridly and sketchy, it was literally impossible to implement as signed.

The general consensus was either clarity or a punt… Thank goodness we received the latter Friday afternoon….

Not to worry, we have a good memory and will be on it in 2026, but for now the heat as expected, but starting to worry, if off! Yay

Have a Good “IRS Clarified” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Why you should Check that Social Security Statement – No Matter your age! Confirm you received credit for your payments/Earnings History!

Every year we post a reminder here to double check your Social Security Statement… Our reminder is triggered by the annual email from the SSA (Social Security Administration) reminding US to review our statement…. Well this year our email has come really late, as in years past it was in February…. Hey Better late than never!

Break In – We will let those currently receiving SS know the COLA (Cost of Living Adjustment) when it occurs in about two months – after the CPI W for the quarter is calculated – Likely low single digits this year – Ok back to our regularly programming!

New font and back ground color here! yay

Why You Should Check your Social Statement? Confirm your Credits!

Unless you are already drawing Social Security, or unless you have no earnings, you should have a Social Security Account and should check it annually…

Here is the log in – Actual link (not hot linked) for security purposes – https://www.ssa.gov/myaccount/ Only takes a few minutes to get your account set up!

Confirm your credits via your Earning History

Confirm you received credits for your hard earned money is very important, and easy…. here is what the screen shot look like – Below- oh, there are new drop downs for excellent help if your credits are not showing

In the event you have missing reporting, here is a screenshot of the contact information for the SSA – again once in side your SSA portal, it is fairly intuitive!

Have a Great “Social Security Earnings/Credit Reminder” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Clients/Clients Only RMD (Required Minimum Distributions) Season comes early, Friday from Afar… Sharpening the Saw …

RMD’s Early this year

Being creatures of habit, (actually very rigid habit), we wanted to share a change in our regular scheduled programming this year regarding RMD – Required Minimum Distributions ….

Usually an October, November “Thing” this year we plan on doing most of the one timers next week… One timers are that large group that we make the distribution to meet Uncle Sam’s mandate only one solo transaction each year… New RMD folks we will be in touch too, but likely not next week!

Regularly RMD monthly distributors, no changes for us, all stays the same just like we normally do!

With the TDAmeritrade/Schwab Merger over Labor Day weekend, we thought it best to go ahead and take one more item off our plates before the end of the year run as well as the merger…

One last Hurrah – Saw Sharpening in a Cooler Climate with Friends and Family

With a Senior heading off to College and away from the nest… We are on one last trip before the school year begins…. A cooler climate was desired, and luckily found after a heat wave followed us…

Ahhhh…. today is a Friday, heading into a late July weekend… enjoy your day and your weekend…. Talk Next Week!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Second Quarter 2023 Review, Dickens Best and Worst of Times , Party Like its 1999 !

Dear Investor:

As we say goodbye to the end of the second quarter, the middle of the year is currently right before us, and remarkably interesting cross currents abound.

“It was the best of times; It was the worst of times.”

The Charles Dickens old favorite seems like a good quote given the cross currents at our mid-year review and more importantly forward-looking possibilities.

It is no secret that interest rates have risen dramatically, actually on a percentage basis fastest ever, quoting our Q3 2023 Newsletter and main lead article. What is most interesting is the continued stamina of the US economy given the FOMC (Federal Open Market Committee) chaired by Jerome Powell gigantic attempt to slow the US economy in bludgeon hammer like format, with the afore mentioned higher interest rates.

In true what is old is new again “Higher interest rates for longer” again a terrific article in our Q3 Newsletter.  What was once a necessary evil of stability, (fixed income/bonds), is possibly the most pleasurable fixture in our investment house. Now that the preponderance of interest rates hikes is likely far behind us, the hard work is done, and the reward of higher income with lower volatility is looking forward!

Partying like it’s 1999

The vast majority of stocks are adhering to Powell’s desires and at best treading water, at worst admitting defeat. Similar to the dot com (.com) times of 1999, Artificial Intelligence aka AI is the sexy theme of the moment and has put jet fuel on a small handful of company stocks.

Just like lightning, markets rarely tend to repeat, but they do rhyme, and while our hope is that this is not the.com 1999 party, our radar is certainly up.

Referring to our Q3 Newsletter one more time, there seems to be stimulus, just like the candy for the kids at the pool, that has not worked its way through the system. We continue to find more evidence of this and call your attention to the “Slower for longer Article” again in our newsletter.

While cautiously optimistic, we are happy not to be swinging for the fences investors and look forward to how this economic book is finally written!  Time will tell and is our Friend.

Thank you for your time talk to you in the fall,

Sincerely,

John A. Kvale CFA, CFP

Enclosure (2023 Report)

First Quarter 2023 Review, Advanced Analysis Pilot, Tax Season, Interest Rate Anniversary

Dear Investor:

Putting Q1 of the year (2023) behind us, compared to last year at this time, seemed straight forward. recall last year at this time, we had just began interest rate hikes.

As the calendar turned we began searching for a similar series to last years’ “Back to Basics”, due to the popularity, comments, and sharing that occurred with this multiple series.

By luck or accident, we landed upon the antithesis like series called “Advanced Analysis” in part due to the current economic cycle and the nearing of the end.

Advanced Analysis Pilot

Our Pilot/Part 1 of the series was extremely timely and focused around M2 a broad economic measurement of money sloshing around the financial system. This is discussed in greater detail in our Q2 Newsletter at a very high level. Whether lucky, or preeminent, our observation, was to watch out for more high risk debt players in the capital markets and especially junk bonds. This fact seems to be occurring much faster than originally though.

Tax Season – Hints and Reminders

As we turn to Q2 of the year in what seems like expeditious fashion, it is tax season.  We once again call your attention to our Q2 Newsletter as there are some great last minute tips not only looking forward to this year, but also things available that may help last year’s taxes.

Interest Rate Anniversary – Most Likely Nearing an End

As mentioned in the intro, within the last two weeks we have just passed the start of the interest rate cycle, which was the fastest on a percentage basis we have ever seen The US economy and the global economy for that matter, operate much more like an aircraft carrier then a ski boat in their change of direction. The financial sector seems to be in the early innings with other parts of the economy much later in the economic game cycle. We will get through the slowdown eventually with all parts of the economy and move forward.

Have a great spring. Talk to you in the summer!

Sincerely,

John A. Kvale CFA, CFP

Enclosure (2023 Report)