Q1 2022 Newsletter

Market Recap

Following an exceptional 2021, the first quarter of2022 saw most major indexes pull back sharply as global volatility spiked (see chart below). Existing concerns over rising inflation and the potential for faster rate hikes were compounded as Russia invaded Ukraine in late February. As a result, the S&P 500 suffered its worst quarterly decline since the start of the pandemic while commodity prices benefited from economic sanctions imposed on Russia. Riskier assets did rally in late March, however, as parts of the U.S. economy continued to reopen and the labor market remained robust.

Over in fixed income markets, the Bloomberg US Aggregate Bond Index suffered its steepest quarterly decline since 1980 as headwinds from inflationary pressures and more aggressive monetary policy by central banks weighed on sentiment. In particular, traditionally safer assets such as treasuries and other government bonds sold off as investors searched for higher yields and better risk/reward opportunities. Meanwhile, more speculative areas of fixed income experienced less ofa decline as low default rates and strong credit fundamentals helped high-yield bonds.

Overall, the first quarter was certainly difficult for markets and those directly impacted by the events in Ukraine. Moving forward, we believe the economy and corporate profits should continue to grow in 2022 as “real” (inflation-adjusted) rates remain low, individuals return to work, and the “reopening” theme plays out. Investors should temper their expectations, however, as the path ahead is still filled with uncertainty and growth is likely to be much slower than it was in 2021.
Ultimately, staying the course and remaining committed to a diversified, long-term investment strategy will remain key as investors ride out the volatility.

2022 Retirement Account Contribution Limits

Each year the IRS announces updated contribution limits for all tax advantaged retirement accounts. Here are some of the recently announced limits for the 2022 tax year:

1) 401(k), 403(b), and Most 457 Plans

The limit on annual elective deferrals will increase to $20,500 for participants covered by these plans. However, the “catch-up contribution” limit will stay at $6,500 for participants that are age 50 or older in 2022.

2) Simple IRAs

The annual contribution limit will increase slightly to $14,000 and the additional “catch-up contribution” limit will remain unchanged at $3,000 for participants that are age 50 or older in 2022.

3) SEP IRAs

The limit on annual contributions from employers will increase in 2022 to the lesser of $61,000 or 25% of eligible compensation. In addition, the eligible compensation limit used in the savings calculation will increase to $305,000.

4) Defined Benefit Plans

The maximum annual benefit that may be provided through a defined benefit plan will increase by $15,000 to $245,000.

5) IRA (Traditional or Roth)

The limit on annual contributions and the additional 50 or older “catch-up contribution” will remain unchanged for the fourth year in a row at $6,000 and $1,000, respectively. However, the phase-out income limits for making deductible IRA contributions and Roth IRA contributions will increase slightly.

If you have questions or would like to discuss any of the information contained here in greater detail, please do not hesitate to contact us.

Sincerely,
AJ, Ryan, Gary, Rhonda and Tom AJ Gilbert, CFP®
Ryan McCafferty, CFP® Gary Fortier, CPA Rhonda Gilbert, CPA Tom Savage, CPA

Disclosures

Keystone Financial Group, Inc. does not provide legal or tax advice

Indices mentioned are not managed and cannot be invested into directly. Past performance does not guarantee future results. Diversification and asset allocation strategies do not assure profit or protect against loss.

Sources used for the article:

• *T. Rowe Price Investment Research
• *J.P. Morgan Investment Research
• *Forbes Magazine