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Update for 11/4/2020

Asset Class Recap as of October 31, 2020

During October, increasing COVID cases and concern that the government may not provide additional financial aid weighed on many asset classes. Not all investments lost value, however, as diversification away from traditional large cap equities and investment grade bonds paid off. Mid and small cap equities as well as emerging markets equities and high yield bonds had positive returns for the month.


Looking Forward

The end of the year is quickly approaching and now is the time to follow up on plans to hit your contribution target levels for 2020. Check your year-do-date 401k contributions to see if you have room to contribute extra from your next few paychecks to get up to the $19,500 maximum. Make that 529 contribution before Christmas shopping season comes around and cash flow gets tight. It is not too early to start thinking about your contributions for 2021. The IRS has announced its annual updates to maximum contribution levels and maximum allowable earnings levels to contribute to tax sheltered retirement savings accounts.

The table below is taken from the IRS’ website (https://www.irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions). There is good news and bad news for 2021. On the bad side, there will be no increase to the amounts we can save in tax sheltered 401k's, IRA's, and SIMPLE accounts. Inflation has been benign relative to history (running under 2%) and most of the contribution limits increased between 2019 and 2020, so we shouldn't be too upset. On the good side, they increased the income limits that workers can earn and still contribute, meaning more workers will qualify for these tax breaks.




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