Stretching Valuation

This year’s annual tax, economic and staffing update has been a bit delayed as we have waited for the dust to settle on the many newsworthy events shaping the market in the first month of 2021. If 2020 seemed like a strange year, 2021 is unlikely to be different. With the election, inauguration, vaccine effort and, of all things, GameStop stock dominating the news, we have already had a very full year. Nevertheless, 2021 marches on and I have some important updates to share.

First, I want to congratulate Maddie on her recent marriage. We wish her and Scott many blessed years to come. I’m also extremely proud of Maddie for completing her nutrition consultant program and launching a new career as a health coach. Her newly launched company is called Clover Wellness Co. and I’m sure she will do great things. She will definitely be missed around here but I know she is excited for this next chapter of her life.

We have begun the search for a new client service administrator and, in the meantime, many of Maddie’s duties will be taken over by myself or Eric Boldger.  If you need any assistance, please do not hesitate to reach out to one or both of us.

With the presidential election we have a new administrations and a very divided Congress. There is significant uncertainty when it comes to policy and tax planning. While the Democratic Party has control of both the House and Senate, the margin is so slim that a single crossover vote can sway major legislative decisions. Currently this is playing out in the economic stimulus package now being debated. We are closely monitoring the policies as they get rolled out and any effect they might have on your portfolio or finances.

In the midst of this we have a continuing pandemic and vaccination effort. The market is at or near all-time highs and by virtually every metric has higher than normal valuations. Stretched market valuations can be very short term, or last years.  As always we want to maintain a disciplined approach and take advantage of long-term opportunities.

Tax, economic, market and political changes can all be very cold and impersonal. Despite the market being high, many individuals and business have, and continue to, suffer greatly. We are committed to helping those impacted by the current conditions in any way possible. If you or anyone you know needs assistance, please do not hesitate to reach out.

Thank you for your trust and we look forward to partnering with you throughout 2021.

Below you will find the updated tax and contribution limits for 2021:

Contribution updates:

·         Unchanged: IRA and Roth IRA: $6,000 ($7,000 with age 50 catch-up)

·         Unchanged: Simple IRA: $13,500 ($16,500 with age 50 catch-up)

·         Unchanged: 401(k) and 403(b): $19,500 ($26,000 with age 50 catch-up)

·         Increased $40: Wisconsin 529 deduction: $3,380 (excess contributions can be carried forward)

In addition, some phase out and contribution limits for higher earning clients:

·         Increased $5,000: Annual compensation limit for defined contribution plans increased to $290,000

·         Increased $1,000: Total defined contribution limit is now $58,000

·         Increased $1000/$2000: The total phase out for Roth IRA contribution is now $140,000 (single) and $208,000 (married filing jointly)

·         Increased $1000: The total phase out for Traditional IRA deductions when already covered by a retirement plan at work is $76,000 (individual) and $125,000 (married filing jointly)

The information given herein is taken from source that IFP Advisors, LLC, dba Independent Financial Partners (IFP), IFP Securities, LLC, dba Independent Financial Partners (IFP), and its advisors believe to be reliable, but is not guaranteed by us as to accuracy or completeness. This is for information purposes only and in no event should be construed as an offer to sell or solicitation or an offer to buy any securities or products. Please consult your tax and/or legal advisor before implementing any tax and/or legal related strategies mentioned in this publication as IFP does not provide tax and/or legal advice. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors. This report may not be reproduced, distributed, or published by any person for any purpose without IFP's express prior written consent.