2017 was eventful to say the least. The stock market saw several benchmark indexes reach record highs throughout 2017 with market growth occurring despite several events that could have been challenging, such as the Russian probe, Federal interest rate increases, damaging hurricanes, and a potential struggle over the debt ceiling. Nevertheless, strong corporate profits and a general upswing in domestic and global economic growth helped push equities to new highs. The Dow closed the year with a gain of 28.11%, while the S&P 500 expanded 21.83% and the Nasdaq gained 28.24% over last year’s closing value, driven by robust performances from the technology sector. US Small caps, as measured by the Russell 2000, which grew over 19% in 2016, enjoyed a more modest, yet noteworthy, year-over-year climb of 14.65%. Globally, stocks also closed out 2017 with magnificent gains with the MSCI EAFE up 25.03% and Emerging Markets up a whopping 37.28%. Despite the interest rate increases in 2017, bonds were able to post a positive return of 3.54% for the year as measured by the US Barclays Aggregate Bond Index.
Looking ahead, 2018 is off to a rousing start with the passage of major tax overhaul legislation via the Tax Cuts and Jobs Act that could impact consumer and business income and equities. The U.S. economy, as well as major world economies, are expected to continue to grow in 2018 despite stubborn inflationary expansion.
Key Summary Provisions of the Tax Cuts and Jobs Act of 2017
Key Cost of Living Adjustments for 2018
Employer retirement plans
The limit on annual contributions to an IRA remains unchanged at $5,500 in 2018, with individuals age 50 and older able to contribute an additional $1,000. For individuals who are covered by a workplace retirement plan, the deduction for contributions to a traditional IRA is phased out for the following modified adjusted gross income (AGI) ranges:
|Single/head of household (HOH)||$62,000 – $72,000||$63,000 – $73,000|
|Married filing jointly (MFJ)||$99,000 – $119,000||$101,000 – $121,000|
|Married filing separately (MFS)||$0 – $10,000||$0 – $10,000|
The 2018 phaseout range is $189,000 – $199,000 (up from $186,000 – $196,000 in 2017) when the individual making the IRA contribution is not covered by a workplace retirement plan but is filing jointly with a spouse who is covered.
The modified AGI phaseout ranges for individuals to make contributions to a Roth IRA are:
|Single/HOH||$118,000 – $133,000||$120,000 – $135,000|
|MFJ||$186,000 – $196,000||$189,000 – $199,000|
|MFS||$0 – $10,000||$0 – $10,000|
Estate and gift tax
If you, or anyone that you know, have any questions on the market or how the changes to the tax code might impact you, please give us a call at 209-957-7413 or email email@example.com.
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