The Low Down on Retirement Accounts 2024

Hello from Sycamore,

If you are 73 or older and haven’t taken your Required Minimum Distribution (RMD) for the 2024 tax year, you will likely need to by year’s end.

What is an RMD?

An RMD is the minimum distribution you must withdraw from your retirement account each year.

When do I have to begin taking RMDs?

You must begin taking your RMDs on April 1st of the year following the calendar year in which you reach age 73. What does this mean?

  1. Example: Your 73rd birthday was anytime in 2023. As long as you will reach age 73 by December 31, 2023, you must take your first RMD (for 2023) by April 1, 2024.

Then each year after this you must take your RMD by December 31 of that year.

Can I take more than my RMD amount?

You can withdraw more than the minimum amount required. The total amount you withdraw will be included in your taxable income.

Can I take withdrawals before 73?

Yes. Once you reach 59 ½ you may take withdrawals with no early withdrawal penalty. You will still be responsible for regular income tax on the complete amount withdrawn.

You may also withdraw funds prior to age 59 ½ however, you will likely need to pay an extra 10% early withdrawal penalty in addition to the regular income tax.

Highlights for 2024

Retirement Savings Plan Contribution Limits have changed.

  1. 401(k), 403(b), 457 plans, and federal government Thrift Savings Plan contribution limits are $23,000.
    1. Catch-up contributions for those over age 50 are $7,500.
  2. IRA contribution limits increase to $7,000.
    1. Catch-up contributions for those over age 50 are $1,000.
  3. SIMPLE IRA contribution limits $16,000.
    1. Catch-up contributions for those over age 50 are $3,500.

As always, do not hesitate to reach out to our offices at (765) 455-1554 to discuss this.

Thank you for your continued trust and support,

Sycamore Financial Group

*Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Investment return and principal value of an investment will fluctuate. Investor value, when sold may be worth more or less than their original cost.

By |2024-05-09T03:39:54-04:00May 9th, 2024|2004 Newsletters|0 Comments

Effects of Higher Energy Prices – Winter 2004

Hello from Sycamore,

What are the effects of higher energy prices on our economy?

This question comes up several times each day, and while all of us know the effect of higher gas prices at the pump, it’s more difficult to see the overall effect of higher energy prices on our economy. I’ve done a little poking around lately searching for a satisfactory answer to this question and along the way have come across some interesting and positive facts about energy usage in the United States. Prepare to be pleased…

According to the American Council for an Energy Efficient Economy, “The total primary energy use per capita in the United States in 2000 was almost identical to that in 1973. Over the same 27 year period economic output (GDP) per capital increased 74 percent”…”National energy intensity (energy use per unit of GDP) fell 42 percent between 1973 and 2000.”…”The energy intensity of the economy dropped over 3% per year during 1996-2000.”

Where did these gains come from? Here are a few examples:

  • The average rated fuel economy of new cars increased from 16 mpg in 975
    to 28 mpg by 1987. Trucks increased from 15 to 26 mpg over the same period.
  • Average electricity use of new refrigerators declined from 1725 kWh/yr in
    1972 to 685 kWh/yr by 1999.
  • The energy used to produce a ton of steel declined about 25% from 1975 to 1994.
  • The amount of energy used per ton of pulp and paper production declined
    27% from 1970 to 1994.

These gains are, I think, significant and the current estimates are that by 2020 we could be using as much as 20% less energy than we are today. Nothing will encourage us to conserve, and find alternative sources of energy more than high prices. Who knows, possibly these spikes in our energy costs are, in the long run, good for us and our economy.

So back to the original question, what effect will the high energy prices have on our economy? Certainly it will put some upward pressure on the inflation rate and jobs in some industries may be lost while others will be created. Additionally, at least temporarily, higher energy costs will likely put a damper on our rate of economic growth. Considering the information above about our energy efficiency, we think the effect of higher energy cost on our economy should be relativly small and will likely be significantly less than it was in the mid seventy’s when this type of increase last occurred.

We are all fortunate to have the opportunity to invest in and be a part of a very efficient (sometimes brutally so) economic system. So far this “supply and demand” thing seems to be working pretty well.

As always, if you have any questions or would like additional information, please feel free to send an e-mail or give us a call.

Thanks for your business and trust,

Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2022-07-20T15:47:37-04:00November 25th, 2004|2004 Newsletters|0 Comments

Tax Freedom Day – Fall 2004

Hello from Sycamore,

Tax Freedom Day

I ran across some good (relatively speaking) news about taxes and wanted to share it with you. In 2004 it was estimated that, as a country, we reached Tax Freedom Day on Sunday April 11th. This is the earliest we have reached this date since 1967 and it’s 21 days earlier than in 2000. The two major reasons for the lighter tax burden are the recent tax cuts and the post recession economy that is not producing tax revenue as quickly as growth.

Tax Freedom Day is the day when all Americans have earned enough to pay off their total tax bill for the year. All income sources and all taxes (local,state & federal) are included. In addition to a Tax Freedom Day for America, there is also a Tax Freedom Day for each state. A few that may be of interest are Indiana, April 7th, Florida, April 8th, Alaska, the best at March 26th and Connecticut, the worst at April 28th.

The average American works 36 days to pay Income tax, 28 days to pay social security tax, 16 days to pay sales and excise tax, 11 days to pay property tax and 9 days to pay corporate income taxes. Somehow the corporate income tax works it’s way down to the average consumer, what a surprise!!! On average we work more days each year to pay taxes (101) than we do to provide housing and household operations (66) or food (31). Can you see the indigent at the intersection holding a sign that reads “will work for taxes.” :-)

It always seems that our taxes are far too high but historically, America has been a low tax country. In comparison, look at Great Britain, with an estimated tax freedom day of June 11th this year, or Canada who’s tax freedom day was estimated as June 27th in 2004. There are, of course countries with earlier tax freedom dates than the Unites States but these countries may not have the provided services that we have come to expect in America. While it seems that taxes are a burben,and they are, we really do receive quite a bit in return. Some examples are social security benefits (retirement, disability, etc.), medicare, public schools, business loan programs, disaster relief, college loans and grants, and, most importantly, a military that protects our way of life.

Tax freedom day was earlier this year than it has been for 37 years. Of course, we’re all looking forward to more improvement, but in the meantime we’ll take the current reductions with a smile.

Thanks for your business and trust,

Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2022-07-21T12:26:23-04:00October 18th, 2004|2004 Newsletters|0 Comments

Long Term Care Insurance – Summer 2004

Hello from Sycamore,

Should you consider long term care insurance?

Almost every time we are completing a financial or investment plan the discussion gets around to long term care insurance. Of course most clients want to know three things…1) Do I need it? 2) How does it work? & 3) How much does it cost?

Do you need it?

Lets look at the needs part of this threesome first. First, you should understand that as we identify who needs this type of insurance we are considering the financial need only. Your personal preferences are not a part of this calculation but of course when you are applying our analysis, your “feelings” are VERY important. The annual cost of staying in a nursing facility for one year in Indiana, is about $50,000 and the average stay is 2.6 years, so who really needs long term care insurance? Well, we can easily eliminate two groups of people, those that are very wealthy & have substantial income and those that have virtually no assets or income except social security.

If you have substantial assets, and a reasonably good income, we feel that you should consider self insuring and do not necessarily need long term care insurance. As an example, let’s assume that you have investment assets of $600,000 and a current income from Social security and pension of $24,000. The income you receive would be used to pay almost one half of the cost of your care. If your $600,000 was invested and earned only 5% per year, it would provide another $30,000 annually. That amount would be enough to pay for the balance of your care. Under this scenario, you could self pay and still maintain your current assets. This example assumes a very simple situation. You, however will likely will need to consider other variables such as a spouse, dependent or other financial obligations.

For individuals that have very limited assets, we feel that insurance is not needed because Medicaid will very soon be paying for the care. Additionally, long term care insurance is an additional expense and if you have limited resources you may find it unpleasant to pay the premiums.

We generally recommend that the clients with assets between 100,000 and $600,000 and the desire or need to protect those assets for their survivors should consider long term care insurance.

How does it work?

The are several different kinds of policies and a variety of coverage’s available. One that we feel should be given serious consideration is the Indiana Long Term Care Insurance Program. The following is a very brief discussion of how this program works.

Administered by the Office of Medicaid Policy and planning, these policies are a partnership of sorts between Indiana and certain insurance companies who have agreed to offer long term care policies that meet the standards set by the state. The goal of these policies is to allow you as an insured the option of protecting a part or all of your assets if you need to go to a long term care facility. There are variations on the theme but the general drift is that a holder who has purchased a policy with a minimum benefit that will cover the full cost of an average stay in a facility (about $187,613 currently), will qualify for Medicaid without spending down their assets. This does not protect your income, only your assets.

How much does it cost?

The premiums vary depending on the amount of coverage you select and your current age and health. We have listed a few samples below but your best path is to get a personal quote if you feel that you need or would like the coverage.

These selected premiums are for policies that will give you asset protection under the Indiana Plan. They are general estimates only.

Age
  Aproximate Annual Premium
50
$1,700
60
$2,500
65
$3,500
70
$5,200
75
$8,400

If you have specific questions or would like more information, feel free to send an e-mail or call.

Thanks for your business and trust,

Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2020-01-13T06:02:48-05:00March 12th, 2004|2004 Newsletters|0 Comments

Mutual Funds Inquiry – Winter 2003

Hello from Sycamore,

As you already know, trading procedures in the mutual fund industry are being reviewed. We thought you may want to know our position on this issue. We are not the final authority on this subject and these are simply our thoughts.

Mutual fund investigations have focused on two areas of trading: late trading and market timing. Late trading, which is illegal, refers to the activity of placing a buy or sell order of a mutual fund after the market closes (4:00 p.m. eastern time) and still receiving that day’s price per share. Late trading benefits investors by allowing them to trade on news that occurred after the end of the trading day at prices not available to other shareholders. Market timing refers to frequent moves in and out of the market. Market timing is legal. The complaint is that market timing, in certain situations, is “inappropriate” and could harm other investors (most of you know that we do not believe that market timing works).

It is our understanding that the top 80 mutual fund companies have been asked to provide the SEC and other regulatory bodies with information regarding their trading practices, so don’t be surprised if you recognize a name in the news. Highly publicized names like Putnam and Strong are not accused of the illegal activity of late trading, but of insufficient oversight in the gray area of market timing.

Is there anything that you should do?

First, we caution investors not to get swept up in the media storm. If you purchased funds from a mutual fund company criticized in the news, remember you own the stocks and/or bonds mutually owned by the fund shareholders; you do not own the stock of the company being criticized. Therefore, if any values go down due to this short term crisis, it will be the stock of the managing company, not the securities of the companies they have purchased for you.

Second, projected and estimated losses reported in the newspapers might sound large because they are talking about one cumulative number; however, if losses exist, the number would be relatively small for any individual investor. According to Stanford University finance professor Eric Zitzewitz, any losses are likely to add up to 1% or less in lost returns in a given year ($10 or less for each $1,000 invested.) (Wall Street Journal 11/4/2003) An article in the December issue of Forbes put it this way “ Putnam is the nations fifth largest fund family, with $146 billion In fund assets, according to Lipper. The reported $700,000 in improper trading profits several of it’s traders made amounts to a 20th of a basis point, or 48 cents per $100,000.” At this time, it is not clear what losses will be and any estimates are purely speculative.

Third, Stay focused on what is important. Negative, sensational reporting of this problem sells magazines and newspapers but it is not intended to help you earn more on your investment portfolio. Dalbar, Inc. reported in a 2001 study that for the period from January 1984 through December 2000 “the average equity fund investor realized an annualized return of 5.32% compared to 16.29% for the S&P 500 Index”. The reason for the stark difference in returns is that many investors jump in and out rather than remaining invested. We feel at this time, the best course of action is to monitor the situation but stay the course with your current investments.

As the “Dean of International investing”, Sir John Templeton, has frequently reminded us, “Investing is risky for many reasons and the possibility of corporate malfeasance or impropriety is one of them, but…the opportunities are still great”.

Thanks for your business and trust,

Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2020-01-13T08:19:34-05:00November 15th, 2003|2004 Newsletters|0 Comments
Go to Top