January 2015 Newsletter to Clients
Submitted by Moneywatch Advisors on January 8th, 2015HAPPY NEW YEAR!
Enjoy this month’s edition which features 2014 year in review, highlights changes to 2015 IRA and retirement plan limits and identifies dates for important tax preparation documents.
Year in Review: We welcomed Lee Chapman as our new Operations Director, one year ago and it has been a great experience working with him. He is a quick study and is in command of our complete operation. Joe Bonilla and Lee work together to satisfy client needs. Joe joined Moneywatch in July 2013 with the job designation of Client Support Specialist, but management has since added the title of Associate Financial Advisor to his company billing. Both Lee and Joe serve our clients in a professional manner and our company commendably. Ramsey Bova, our leader and my fellow Moneywatch shareholder, has been on board since she graduated Clemson University with a degree in Financial Management in 1998. She is President and Chief Operating Officer as well as a substantial owner of our company.
No one is getting any younger, especially Bill Leffler who recently celebrated his 85th birthday and I (Bob) who will be 73 this June 27th. No gifts, please.
Ramsey and the team stand ready to serve every client in the event of the unimaginable. Bill, Ramsey and I don’t fly together.
The stock market performed superbly during 2014 but our income funds, specifically BlackRock and the gold fund had disappointing results. We own BlackRock for its cash flow and although management had to reduce the monthly distribution less than a penny this past year, they did declare an extra dividend payment of 3.4 cents payable along with the regular monthly of 6.53 cents on January 9th. Distribution yield this year based on the current depressed price, which I think is the result of year-end tax selling, is over 6.0%. As long as the Federal Reserve Bank keeps short term interest rates low, BlackRock’s earnings cannot rise as we hope. Once our economy gains more traction, the Fed will raise short term rates.
Our venture capital investment, Harris & Harris (TINY) and the gold fund, First Eagle (SGGDX), were drags on overall performance but fortunately comprise less than 10% of our total portfolios. The performance of the stock market is forecasting better economic times ahead and we plan to be part of it. As many of you have seen, we did our best to offset capital gains earned during 2014 from sales and unusually large mutual fund distributions by selling some of the few disappointments mentioned above. Taxpayers must wait 31 days before repurchasing a capital asset sold for a loss so we will likely be waiting until your regularly scheduled quarterly review to invest the extra cash in your accounts.
Retirement Planning: On October 23, 2014, the IRS announced some increases to IRA and retirement plan contribution limits for 2015. The below chart highlights some of the changes that affect most of our clients. These changes take effect January 1, 2015 so please contact your HR professional/department to maximize your benefits. For additional information please reference the IRS bulletin at this link, IRS Bulletin IR-2014-99.
|
Defined Contribution Plan Limits |
2015 |
2014 |
|
For 401(k), 403(b) and most 457 plans, the COLA increases for dollar limits on benefits and contributions are as follows: |
|
|
|
Maximum employee elective deferral |
$18,000 |
$17,500 |
|
Employee catch-up contribution (ages 50 and older) |
$6,000 |
$5,500 |
|
Defined contribution maximum limit, all sources |
$53,000 |
$52,000 |
|
Defined contribution maximum limit (ages 50 and older) |
$59,000 |
$57,500 |
|
Employee compensation limit for calculating contributions |
$265,000 |
$260,000 |
|
Compensation of “highly compensated employees” in a top-heavy plan (HCE threshold) |
$120,000 |
$115,000 |
|
Non-401(k) Workplace Retirement Plan Limits |
2015 |
2014 |
|
SIMPLE employee deferrals |
$12,500 |
$12,000 |
|
SIMPLE catch-up deferrals |
$3,000 |
$2,500 |
|
SEP minimum compensation |
$600 |
$550 |
|
SEP annual compensation limit |
$265,000 |
$260,000 |
|
Social Security wage base |
$118,500 |
$117,000 |
Tax Preparation: In preparation for the upcoming tax season, the following important documents for 2014 will be mailed by:
- Management Fees Paid (Moneywatch Advisors will mail in February)
- Realized Gains & Loss Report for taxable accounts (We will mail in February)
- 1099’s (TD Ameritrade will begin issuing in late February)
Thank you for your continuing confidence.
Past performance is no guarantee of future results. The opinions expressed are those of Moneywatch Advisors, Inc. and are no guarantee of the future performance of any particular fund. This information is for educational purposes only and is not intended as investment advice. Please consult your financial advisor for more detailed information or for advice regarding your individual situation.
