Finish strong. Stocks closed the quarter, and 2020, with strong returns, despite lingering economic concerns brought on by a resurgence in coronavirus cases, challenges with the vaccine roll‐out, and uncertainty around the policy implications following the Georgia Senate runoff outcome.
The late-December COVID-19 relief bill (the Consolidated Appropriations Act, 2021 or the “Appropriations Act”) included various retirement plan-related provisions among its 5,500+ pages. A closer look at those provisions reveals that the most significant relief applies to organizations that might otherwise experience a partial plan termination. This month’s article takes a deep dive into that relief and addresses other important nuggets for plan sponsors to consume, including some student loan repayment relief applicable outside of the retirement plan context.
Equities ended the week, and the year, at new record highs amid the rollout of several Covid‐19 vaccines and a new economic relief package from Congress. Combining 2019 and 2020, the S&P and Nasdaq had their best two‐year performance since 1998 and 1999.
Equities were mixed in the holiday‐shortened week. The S&P 500 declined slightly, while the Nasdaq and Russell 2000 gained. It was the eighth straight weekly gain for the Russell 2000 which sits just below it’s all‐time high.
All four major stock market indices made record highs on Thursday, and advanced for the week. The Cboe VIX Volatility Index fell to 21.7 from 23.3 last week, and the US 10‐year Treasury yield rose 0.05% to 0.95%. Optimism for a new coronavirus relief bill fueled markets most of the week with lawmakers continually hinting that they were close to an agreement, but ultimately they failed to arrive at a stimulus deal by weeks end.
The S&P 500 Index was down 4 of the 5 days during the week as optimism for additional fiscal stimulus began to fade. The House and Senate did pass a one‐week federal spending extension to avoid a shutdown through Dec. 18 to buy more time for a stimulus agreement.
When the IRS announced various 2021 retirement plan limits in October, we knew few limits would change for next year. However, as we get closer to January, it’s important to ensure payroll departments and providers are prepared to apply:
We were a little hesitant to use the term “Post-COVID-19” in the title of this month’s newsletter. It’s not in our past. We’re still in the midst of the pandemic and many data points suggest some tough months ahead. However, we do know that COVID-19 has shifted how most of us think, work, and communicate. As your organization conducts its business planning and strategy meetings relating to 2020, how will your organization adapt its retirement plan strategy? Here’s a gameplan for ensuring you – and your consultant – adapt the approach in 2021.
Don’t tell December that it was a November to Remember. The S&P 500 large‐cap index, the tech‐heavy Nasdaq Composite, and the Russell 2000 small‐cap index all closed out the first week of December, right where they ended November, at new record highs.
Global equities and U.S. small caps had their best month ever and the mega‐cap Dow Jones Industrial Average crossed above the 30,000 for the first time. It probably isn’t a coincidence that the Fed’s balance sheet also hit a record high as liquidity injections persisted to support the recovery. For three straight Mondays, different drug companies announced advances on vaccine trials that sparked a big rotation into stocks that benefit most from economic growth; particularly small, cyclical, and value oriented stocks.