IRS Form 1099 Timing

If you are reading this article, congratulations! When it comes to filing tax returns, your mantra is: “Git-R-Done,” as Larry the Cable Guy likes to say. But, as you seek to finish up your tax return, you might find a fly in your soup. And that fly is known as Form 1099 – which you may be waiting to receive from LPL Financial. Here’s a little background on Form 1099:

Form 1099-R
This is a form that is generated when you take a distribution from a retirement account, such as an IRA or a 401k. The form lists things such as: the amount of distribution, and whether or not you withheld tax from the distribution. Or, in the case of a rollover, it may indicate that the distribution is a non-taxable event.

Form 1099 Consolidated
This is a form that is generated for non-retirement accounts. There is quite a bit of data on a Form 1099 Consolidated, and it includes multiple 1099 forms, including: 1099-DIV, 1099-INT, 1099-B, 1099-MISC, and 1099-OID. To make this easy to understand, going forward, I’ll refer to Form 1099 Consolidated, simply as Form 1099-C.

The IRS Battle and Reclassification
As it pertains to Form 1099-C, there is a type of “battle” that takes place between equity companies (such as mutual funds and REITs) and the IRS. And that battle is played out through Form 1099-C. For example, let’s say that a REIT company lists their capital gains in a manner recommended by their team of accountants. That information would then be transferred to LPL and LPL would issue Form 1099-C to you. But if the IRS disputes it, they might need to battle it out – so to speak. Not surprisingly, this battle has a legal name to it. It’s called reclassification. And if an equity firm has to reclassify, it results in a revised Form 1099-C through the broker dealer.

Now that you understand the issue at hand, here’s where it might affect you. Imagine that LPL went ahead and mailed Form 1099-C to you at the end of January. And as a result, you put the finishing touches on your tax return and filed it with the IRS. But then, a few weeks later, as a result of reclassification, LPL issues a revised Form 1099-C. It’s possible, if this came to fruition, that you might have to file an amended tax return with the IRS. Not fun, right?

LPL’s Solution
Therefore, to try to reduce the instance of sending out revised Form 1099-C, LPL purposely invokes a delayed schedule for releasing them to clients. This is especially true for those of you who hold REIT positions in non-retirement accounts.

Form 5498
Form 5498 is delivered to investors who hold IRA accounts. It is NOT required to be turned in with your tax return. It’s more of an FYI to the government. You will receive Form 5498 in June – well after most have filed a tax return.

Here are some details on the release schedule from LPL Financial:

  • Form 1099-R: Mailed on January 29th
  • Form 1099-C: Mailed on January 29th if it does not require reclassification. This usually pertains to stock, mutual fund, and bond positions in non-retirement accounts.
  • Form 1099-C: For non-retirement accounts that hold non-traded REITs, the mailing date may be as late as March 12th. And if this is the case for you, it’s also possible that revised 1099-C forms may follow afterwards. It just all depends on that reclassification battle that I described earlier.

So, the moral of the story here is simple: Even if your tax return is all finished, consider holding off on submitting your tax return until the second week of March. I understand that it’s not preferable, because you may want to complete your return sooner rather than later. But it is prudent in order to reduce the chance that you might have to file an amended return.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.


Data Privacy Day

Happy Data Privacy Day

The January 28 event promotes best practices for protecting your data.

Every January 28, at least 50 countries recognize Data Privacy Day, an event designed to raise awareness and promote best
practices for protecting personal data. While the day falls but once a year, it’s important to embrace its recommendations and
apply them daily whenever you are online. Below is a list of the most important steps you can take to prevent cyber criminals
from stealing your personal information.

Download the list here.

Contact us for more information or for help with your financial planning.


Client Letters Education

Getting Ready for the Upcoming Tax Season


This information is not intended to be a substitute for specific individualized tax advice. We recommend that you discuss your specific tax issues with a qualified tax advisor

Tax Season is approaching and being prepared is the best way to make this tax season your easiest yet. Following are important information and tools to help you get ready. As always, meeting with your financial advisor early and often will ensure your questions are answered, so reach out to your financial advisor today.

Why are there different mailing dates for 1099 Consolidated Statements?

During the 2020/2021 tax season, LPL will mail 1099 consolidated statements in four waves (similar to other major financial firms) to meet all IRS deadlines, reduce errors, and cut down on the need to mail corrected forms.

See “Important Tax Season Mailing Dates”  for a full list of mailing dates. Certain investment types are more likely to experience income reclassification (sometimes referred to as income reallocation) and other adjustments made by issuers each year after original financials are reported, which will result in your tax statement not arriving on the anticipated February 12 date. In these cases, your 1099 tax statement will be mailed between February 19 – March 12, 2021.

Reclassification: What is it and what do I need to know?

Income reclassification (sometimes called income reallocation) is an annual process where security issuers change the tax characterization of distributions that were paid during the tax year. Often, the result of income reclassification is a more favorable tax treatment. The income reclassification process takes place after the end of the tax year, during the first quarter, when security issuers announce their income reclassification for the previous tax year. The income reclassification process affects income distributions you may have received during the previous tax year. The IRS requires final income reclassification to be reported to you on Form 1099.

Please note: Reclassification is an industry-wide activity. All financial industry firms receive reclassified data from the issuers.

Should I file an extension?

It is always a good idea for you to maintain an open line of communication with your financial advisor and your tax advisor throughout the year to ensure the best tax strategy and outcomes for you. This dialogue will help you decide if filing an extension is the best course of action. There are many reasons why filing an extension might make sense for you. For example, the volume of data or complexity of certain transactions inside or outside your account may require additional time to address. Also, if you are expecting to receive your 1099 in the fourth mailing wave in March, it may be reasonable to consider filing an extension to allow sufficient time for your tax advisor to accurately complete your tax return forms.

If you are unsure about your holdings, be sure to discuss them with your financial or tax advisor.

Corrected Forms: What do I need to know if I receive a corrected tax form in the mail?

Further delayed reporting and reclassification from security issuers can sometimes occur with our staggered mailing system, which will result in you receiving corrected 1099 forms after the referenced mailing dates. The IRS requires that a corrected form must be sent for any adjustments received from the security issuers after the original tax form is produced.

Security types most likely to reclassify are:

  •  Regulated investment companies (mutual funds)
  • Unit investment trusts (UITs)
  • Real estate investment trusts (REITs)
  • Widely held fixed investment trusts (WHFITs)

There is not an IRS cutoff or deadline for providing corrected 1099 forms. If you need to file an amended tax return, it’s recommended that you discuss the situation with your tax advisor prior to refiling so they can determine the best course of action based on your individual circumstances.

For more help answering tax season questions and finding additional saving opportunities, contact your financial advisor.

When can I download my documents on TurboTax®?

You will need to have an active AccountView profile to upload your tax data into TurboTax®. Forms will be available for download once all of the forms for your account(s) are available. We recommend you wait to download your tax forms until you have received your tax statements in the mail to compare the data and ensure the TurboTax® download is complete and accurate.

For technical questions, please contact Intuit TurboTax® or visit

Important Tax Season Mailing Dates

Becoming familiar with the mailing schedule is one of the most important ways to stay organized for tax season. During the 2020 tax season, to meet all IRS deadlines, reduce errors, and reduce the need to mail corrected versions, LPL will be mailing the 1099 Consolidated Statements in four phases.

Click here for a copy of “Important Tax Season Mailing Dates”.

Click here for a copy of “Getting Ready for the Upcoming Tax Season”.




Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL Financial affiliate, please note LPL Financial makes no representation with respect to such entity.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations | May Lose Value








COVID-19 Data from CDC (updated daily)

Cases by Jurisdiction

Deaths by Juridiction


COVID-19 Response and Protocols

Our team has restarted in-office client meetings. And in light of the pandemic, we thought you might want to watch a video in regards to both our response and protocols for COVID-19. If you have any questions, as always, please contact our office.

Market News Education

Optimism Abounds Despite March Swoon

I want to start off this letter by saying thank you. Thank you for the continued trust you place in our practice. And thank you for sticking with your investment plan, even as the attention-seeking pundits in the press are stoking the flames of panic.

Stock Market Correction: A One-Two Punch from Coronavirus and Oil
As you’ve followed the news, you understand that March of 2020 was historically bad for stock markets. Volatility is here and likely to be with us for a while. But, as I described in a previous message, sticking with your plan is vitally important. That’s because market timing, as a strategy, doesn’t work. But with that said, if your circumstances have changed, such as lost employment or health challenges, that may warrant a shift in strategies. Please contact our office if that’s the case.

In the next few days, you will receive your quarterly statements. It’s likely that you will see a drop in value, perhaps significant. To better understand what’s going on in our markets, I’ll touch on the concepts of “bulls and bears.” A bull market is one that grows by 20% or more. A bear market is one that declines by 20% or more. In an average cycle, it usually takes about 2 years for the stock market to transition from bull, to a bear, and back again. So, just how volatile was the stock market in the month of March? Our stock market just completed that very same cycle in the short span of 17 days! With all the bad news from the stock market, one thing that gets overlooked is the glimmer of hope that the markets recently provided: The week of March 23rd was the best performing week of the stock market since 1938. One great week, however, is little consolation when looking at your statements. But it does mean that the patient (our stock market) does have a heartbeat.

What happened?
The rapid news of Coronavirus resulted in an unprecedented economic shutdown in the history of our country. Internationally, we froze travel, including China and Europe. And soon afterwards, most states shut down schools and non-essential businesses and activities. Most every segment of the economy has been impacted one way or another. Through these shocking developments, the one constant has been the “unknowable.” In other words, we all have lots of questions, but few answers. And as you’ve likely heard me say in previous meetings, the stock market doesn’t react well to the unknowable. Bad news, for example, such as higher unemployment numbers, is something the market can absorb. But the fast and harsh stoppage of everyday life, led to a brutally historic decline in the stock market.

The One-Two Punch
To better paint a picture, let’s call Coronavirus the “punch to the gut.” Metaphorically speaking, while the market was slumped over after that punch to the gut, it took an uppercut to the chin in the form of collapsing oil prices. Oil price collapse was the result of two distinct criteria: one that was organic and one that was artificial. The organic collapse occurred because the world shut down. It’s just a matter of supply and demand. Almost overnight, the world demand for oil drastically declined. The artificial collapse, however, was even more damaging. I’ll take a moment to explain. Back in the 1990s, for example, OPEC came to be known as an obscene four-letter word in American vocabulary. That’s because OPEC would frequently cut oil production to artificially raise the price of oil, and consequently, our price of gasoline at the pump.

Now, back to the present. OPEC held an emergency meeting as Coronavirus began shutting down world economies. Most OPEC leaders wanted to cut oil production, in order to stabilize the price of oil. Although in the past, this was something we came to despise, this was one time when we needed OPEC to cut production. But Russia balked. Russia vetoed OPEC from cutting oil production. Incensed by Russia’s defiance, on March 10th, Saudi Arabia increased production by 300,000 barrels per day. That decision was disastrous to the price of oil. And the stock market, already reeling from Coronavirus news, plunged even deeper.

But just when it seemed that the news was going from bad to worse, we got a reprieve. On April 2nd, President Trump announced a deal (in principal) in which Russia and Saudi Arabia agreed to significant oil production cuts. On that news, the price of oil surged 24% in one day – the best single day increase in history. The stock market followed suit. This is just another example of how crazy and bizarre our markets are right now. If you are looking for a bit of a barometer, watch the price of gas at the pump. This may sound strange, but I’m cheering for higher gas prices. It may act as a trailing economic indicator, letting us know that our economy is roaring back to life.

State of Calder & Colegrove Investment Group
Everyone on our team, including myself, has been touched by the messages of support and the goodwill wishes that many of you have expressed. And on that note, I will take a moment to detail the state of our practice. We are fully operational, fully staffed, and fully employed. Due to the fact that we have been designated as an essential service, we continue to operate out of our office in Suwanee. However, on Fridays, we have transitioned each team member to work from home. We made the decision to transition to our homes on Fridays in order to put our business continuity plan to the test. That way, if the fluid nature of our situation warrants team members to work at home full-time, we will be ready.

I’m Available to Talk
Due to the trials of the Coronavirus pandemic and the rapid decline of the stock market, I am 100% available to talk with you. Since we can’t hold in-office appointments right now, that’s given me more time to talk on the phone. When I spend time with you on the phone, I get energized. You have inspired me through your positive long-term outlook for our markets and economy. You have humbled me with your patience. You’ve reassured me as much as I’ve reassured you. And I thank you.

Help us Transition from Defense to Offense!
The steps we have taken for our practice have been necessary, yet defensive in nature. Due to social distancing, we were forced to suspend in-office appointments; we cancelled our annual meeting; we moved Friday workdays to each of our homes. And we even paused retirement plan rollovers, because I worried, that the time it took to move the money, might result in missed opportunity – a concern that was realized with the best week in the stock market since 1938 (week of March 23rd).

But now, I’m ready to go on offense. And I need your help.
Chances are good, that you have a friend or family member who is asking questions about their investments. Maybe you know someone who is getting close to retirement and is concerned about how these market declines will impact their ability to retire. Or perhaps you know someone younger, who has been putting off their investment planning. So, I’ll make this short and sweet:

“Please refer me to your close friends and family.”

In America, when the going gets tough, the tough get going. And frankly, I am ready to get going but I need your help to do so. I ask that you refer our practice to your close family members and best friends. Your family and friends have questions about what’s happening in the market today. And I want to help. I ask that you help us go on offense and refer new prospective clients to our practice. We have the capacity to take on new clients. We have the time. And I have the drive, determination and desire to help more clients just like you.
Referring us is easy.

  1. Ask your friend/family member if they would like to hold an informal chat with me.
  2. If they agree, just call our office at: 678-482-0686, ext. 1 or simply complete this contact form with the names and phone numbers of your close friends and family.

Bold Predictions of Economic Prosperity
There is so much gloom and doom in the news these days. And some of it, is understandable, because this is a scary time. But I have confidence, that the finest minds in medicine will solve this issue. They just need time. And we’ve given them time by locking down the country. Let there be no doubt that the finest scientists, physicians, and equipment exists in the United States. And the leadership we have seen from President Trump’s team has been fantastic. Regardless if you are a fan of the President or not, he closed the country to travel with China and Europe amid cries of racism and nationalism. He took the reigns of leadership on the heals of a partisan impeachment proceeding. I agree that his twitter rants can be hard to swallow, and sometimes, just plain mean, but President Trump has risen to the occasion. He has led our response, opened up the purse strings of the federal government, and moved mountains to help states and hospitals. He even invoked the war-time powers of Defense Production Act to force the few non-patriotic American companies to transition to the creation and local distribution, of needed medical supplies.

So, what’s next?
None of us know when we will be able to come out of our homes. But that time will come. Our leaders are hard at work, finding a way to separate the healthy from the sick. That’s the key to it all, as I’m sure you know. Once we are able to complete that task, we can open up our economy for business. And here’s where I will make a bold prediction. There is so much “pent up” spending power in the country right now. Once Americans all go back to work, I believe that retail businesses, including shopping centers and restaurants, are going to see a boom the likes of post-World War II America. There will be so much buying going on, that shelves may empty for reasons other than a run on toilet paper. And the markets…I think they will be due for an increase in historic proportions. The Dow Jones Industrial Average, for example, was sitting at about 29,000 before this invisible enemy attacked the United States. I believe that seeing the Dow Jones pass through 40,000 is not out of the question, especially if President Trump is re-elected. Of course, even if this occurs, there are wounds to address, both the tragic loss of life, and also, the financial burdens of unprecedented U.S. Government deficit spending. But our country is due for an economic boom and a joyous celebration like no other.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

Economic forecasts set forth may not develop as predicted.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Market News Education

Bizarro World: Where Toilet Paper is Worth More than Oil

When I was a kid growing up, the innocence of Saturday morning included my favorite TV show: The Superfriends. And my favorite superhero was none other than Superman, of course. One of Superman’s arch nemesis was known as Bizarro. And on Bizarro’s home world, everything was completely backwards or upside down. For example, Bizarro had freeze vision, while superman had heat vision. And Superman, of course, fought for truth, justice, and the American way. Whereas Bizarro was evil and sought to wreak havoc and destruction.

I wanted to paint the picture of “Bizarro World,” because to me, that’s what we are enduring right now in the U.S. Economy. The stock market has taken a beating, yes, but it’s a lot more bizarre than just that. Kids are home from school. High School seniors are wondering if they are going to march at graduation or not. Concerts have been cancelled. Vacations and business conferences have been shuttered. Even the Disney parks have closed for the remainder of March.

To illustrate my point about Bizarro World, take a look at these two images for a moment:


Now, ask yourself this question. In today’s Bizarro World, which is more valuable to you: a roll of toilet paper or a quart of motor oil?

At face value, I believe that most of us would say the roll of toilet paper. That’s because if you visit your local grocery store or big box store, you are likely to find empty shelves, where once there was plentiful and cheap toilet paper.

Comparing Stock Performance of Toilet Paper and Oil:
But the comparison between these two products goes beyond the empty grocery store shelves. I did a little more research, to study stock companies that make toilet paper and oil, and the results are quite surprising.

Let’s take a look at a comparison of Proctor & Gamble and BP Oil. Proctor & Gamble makes Charmin bathroom toilet paper. And BP is a well-known global petroleum company. As of the close of business on March 16, 2020, Proctor & Gamble has lost 12% of its value, year-to-date. BP Oil, on the other hand, has lost a whopping 51% of its value, year-to-date.

Did Bizarro Just Defeat Superman?
Just take a moment and ask yourself, does it make sense – I mean, any type of logical sense, that BP Oil lost 51% of its value? Or, is that fact about as believable as Bizarro defeating Superman. Simply put, our world is upside down right now. What was up is down (oil). What was once cheap and readily available, is now sold out (toilet paper). Handshakes have stopped. Social distancing is now part of our vocabulary.

Translating this to Investment Decisions
The analogy regarding Superman and Bizzaro World might seem silly, but it really does a good job of painting the importance of normal conditions as it pertains to our investment decision-making policy. At Calder & Colegrove, we believe in crock-pot planning, not microwave advice. The time that we have taken, through the years, to determine your investment direction, was crafted with you in mind – and you alone. It was not done so based on the short-term swings of the market. I have never, nor will I ever, put my trust in the markets when it comes to their short-term direction. I will, however, recognize that some of the greatest gains in our stock markets have risen out of some of darkest days of our history. Here are two quotes that might help paint that picture. But first, a little context. If you are old enough or you’ve read enough history, do you know what happened in the USA in 1974? Take a moment to think on that time in our Nation’s history, and then read on.

In 1974, President Nixon resigned. And the turmoil from that event and the Vietnam War, ushered in an awful and long-lasting downturn in the U.S. Economy – including the stock markets. Jim Fullerton, who was the CEO of the Capital Group (parent company of the American Funds), made this providential statement:

Bear markets do come to an end. And they usually come to an end when all the news is still bad and while the economy itself is still deteriorating. They come to an end not because of some visible external piece of good news, but because raw emotion has carried prices too far down.

Here’s another watershed moment.

In 1932, the United States was in the grips of the Great Depression. The stock market collapse back in 1929 made today’s stock market challenges look like a walk in the park. In May of 1932, Dean Witter had this to say:

Some people say they want to wait for a clearer view of the future. But when the future is again clear, the present bargains will have vanished. In fact, does anyone think that today’s prices will prevail once full confidence has been restored?

Stay the Course or Make a Change?
With all this said, it should come as no surprise that I recommend that we stay the course. Going back to my story about Bizarro World: Does it makes sense to formulate a new strategy based on the backwards and upside-down information available to us today? As I alluded to in our message from February 28th, the Cornerstone from which I formulate investment direction has been temporarily turned upside down.

Are We Worried?
If you are still worried, you’re not alone. In the long run, I believe our markets and economy will rebound, and, as a result, will be stronger than ever. But yes, I’m worried too. Frankly, I’m worried about you. Just in my household alone, both my girls are now home from school. It’s only Monday, and Savannah, my older daughter, is already telling me that she’s bored. She’s bored because she doesn’t want to sit around and play video games. This is her Spring Break. And she was scheduled to engage in a meaningful mission trip, which of course, was cancelled. She wants challenges. She wants to serve. She wants to run track with her team. She wants to get up in the morning and endure the challenges of her classes at school. Most everything is put on hold temporarily here at our home. And I’m sure it’s that way at your home too. So yes, I’m worried about you and your family. Because what’s playing out here at my home, is undoubtedly, playing out at your home and every other home across America.

Risk Quiz
I know that I may sound like a broken record, but if you still want to do a double-check of your risk tolerance, please take 5 minutes, click here, and take our risk quiz. And even if you are confident in your investment course, it’s still a wise and prudent exercise. The process of taking that quiz will help both of us understand what, if any action, should be taken on your investments. That way, we can continue to make sound investment decisions together—not in Bizarro World—but rather, in a clear-minded way, in which once again, oil is worth more than toilet paper.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.


Market News Education

Coronavirus and and the Market Correction

The Coronavirus and How the Press LOVE to Cause a Panic
From the press to the quick retreat of our stock markets this week, there’s been a lot of negative news. And that news is fixated on the Coronavirus. Yet, the risk to you and me, in contracting the Coronavirus, is quite small. And this is not something I’m declaring without merit. Here is a quote directly from the CDC, effective February 27, 2020:

“For the general American public, who are unlikely to be exposed to this virus at this time, the immediate health risk from COVID-19 is considered low.”

The best course of action, from what I’ve read, is what Mom used to tell us. Wash your hands. Cover up your sneezes. And go about life in a normal fashion. And I would like to add something to that: As it pertains to Coronavirus, don’t watch or listen to the news. And don’t read online news either. I don’t care if it’s Fox News or MSNBC, they are all fighting each other for the next sensational news story. That doesn’t mean we bury our heads in the sand. It is important to read up-to-date information. For reliable, non-pontificating, sources on Coronavirus feel free to click the sources below:

Stock Market Correction:
The Coronavirus has caused much more sickness in terms of stock market performance than it has to any of our health directly. There has been quite a bit of panicked selling this week, and frankly no one knows when that will end. And this week alone, the markets are down over 10%. But to put that into perspective, our bad market performance of this week has given back about half the gains we may have enjoyed in 2019. That’s no fun. But I think it’s a long way from declaring that the sky is falling, right?

Putting Coronavirus off to the side for a moment, all of us knew, at some point, that we would have a stock market correction. And remember, corrections tend to be nasty and sometimes, like this one, quite rapid. In anticipation of a correction, during review meetings, we have been diligent to make sure that the investment risk of your portfolio was something that you were comfortable with.

Two Type of Accounts:
To put it in the simplest of terms, as a client through Calder & Colegrove, you likely hold at least one of two types of accounts: a guaranteed account or a non-guaranteed account. Examples of guaranteed accounts usually equate to some type of annuity with a guaranteed provision (guarantees are backed by the claims-paying ability of the insurance company). For example, a fixed annuity with guaranteed principal or a variable annuity with a guaranteed income benefit. The guaranteed provisions in these annuities are designed for nasty stock market moments just like this.

A non-guaranteed account would be one that is subject to market risk, such as mutual funds and stocks. In that instance, we have taken great care to measure the investment risk with which you are comfortable. But with that said, if you own mutual funds or stocks – regardless if they are held with us or through your company retirement plan – you have likely experienced loss during this week.

Shouldn’t We Go to Cash in our “Non-Guaranteed Accounts?”
The question that might be on your mind right now is: Should we “go safe” and get out of the markets? I’ll take a moment to address that. When we are concerned about nasty stock markets, the label for that concern is known as “market risk.” And through the consideration of moving to cash, we are hoping to mitigate that risk. But even if that’s what we did, what most of us don’t realize, is that by getting out of the market, we are inadvertently taking additional risk, such as market timing and missed opportunity. Consider this: Imagine that you pulled out today and went to cash. And let’s say that the market continues to drop for a couple of weeks. But then, when the news is at its worst, the market rebounds over 1,000 points. And then it goes sideways for a bit, but then starts marching onward and upward. For most investors who are out of the market, they are very unlikely to get back in while things are at their worst. But to successfully time the market, that is what would need to occur.

Here’s a summary take-a-way: If you want to go safe in your non-guaranteed accounts, just realize that you may be trading one risk (market risk) for a pair of other risks (market timing and lost opportunity). By the way, that doesn’t mean you shouldn’t make a change. But if you elect to do so, I want to make sure that you understand what risks you are trading.

Positioned for the Long Run
I’m going to call a spade a spade here, y’all. I’m quite “anal retentive” as it pertains to discussing investment risk with clients. Frankly, I imagine that some might even get a little tired of me talking about investment objectives, risk scores, etc. But I do so in review meetings that we hold to prepare all of us for moments like this. We take care to make sure that the risk of your investments is aligned with your tolerance for investment risk. The exceptions are few and far between – for example, some clients are adamant in their desire to hold large stock positions in one company.

In 19 years in business, I have never recommended a wholesale change to a client’s portfolio strictly on the comings and goings of the stock market. The ups and downs of the stock market are simply too unpredictable. It’s like trying to make a recommendation when the ground is quaking beneath one’s feet. As a point of clarification, to me, wholesale changes denote a drastic change in the risk portfolio of a client’s investments, which contradicts their normal investment risk tolerance. On the other hand, we commonly make smaller changes to portfolios and most recently, we did so for many accounts, just back in December.

Now, there have been times that I have made recommendations for wholesale changes, but it has always been due a change that the client has endured. For example, a few years back a client we serve lost her job. And her income was quite important to her family, as you could imagine. At the time, that client had an investment objective of aggressive growth. In layman’s terms, she was a 5 out of 5 on the risk scale. But when she informed me of her lost job, and the fact that she was going to have to polish off her resume and begin the search for her next job, we moved her from 100% risk to 100% cash. I recommended that without hesitation. Because simply put, if her job search process stretched more than 6 months, she was going to need to use the funds from her IRA to support her family. It’s that aspect of her circumstance – the fact that her time horizon switched from long-term to short-term – that caused a wholesale change in my recommendation.

Your Take-a-way
The million-dollar question remains: Should we do anything to our investments? First off, please know this. I have the honor and pleasure of serving you. And this is your money. Even after reading this, if you decide that a change needs to be made, we are here for you and we will do as you request. But if you are asking me if I recommend a change to investments due to the Coronavirus-driven market swings of this week, my answer is a definitive no. It is possible that I may change my mind in the near future, but not today.

Part of what shapes my thinking is that I like to stand on a proverbial “cornerstone” when it comes to making recommendations. In fact, one of my favorite songs from church is Cornerstone. And if your spirit could use a little uplifting due to all the negative news, click here to listen. As it pertains to this week with the stock markets, the information we have to work with is more like sinking sand. And that’s not a place from which to constitute new recommendations.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

Economic forecasts set forth may not develop as predicted.

All data is provided as of February 28, 2020.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

Guarantees are based on the claims paying ability of the issuing insurance company.

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Market Gets Sick Over Coronavirus

Monday was a tough day in the stock market, with the S&P 500 Index down more than 3% as the number of coronavirus cases reported outside of China jumped. Monday’s losses reversed all of this year’s gains so far for the S&P 500 Index and the Dow Jones Industrial Averages. The Nasdaq Composite Index appeared to be holding onto a small year-to-date gain through Monday’s close. After several months of relative calm in the markets, Monday’s volatility probably felt worse than it might have otherwise, but a 3% one-day decline never feels good.

Every virus outbreak is different, but looking back at other major global outbreaks over the last three decades (SARS, bird flu, swine flu, Zika, etc.), we can see that the impact to the U.S. and global economies and stock market has tended to be short-lived. It’s possible the current outbreak has the potential to follow a similar path, although there is still significant uncertainty. The coronavirus has spread more quickly than SARS, the most comparable outbreak, but the policy response also has been more aggressive, and the survival rate has been higher.

To put Monday’s decline into perspective, even in positive years for stocks, the S&P 500 historically has experienced an average peak-to-trough intra-year decline of about 11%. In other words, the S&P 500 has fallen 11% at some point during most years before ending higher. This latest pullback that we’re experiencing has barely reached 5%, and it is still well within the normal range of market volatility. On average, the S&P 500 has experienced three to four pullbacks of around 5–10% per year.

It’s also important to remember that the global economy had started to see a pickup in momentum in late 2019/early 2020, before the outbreak. Leading indicators of economic activity were pointing higher. Purchasing managers’ surveys for the United States and Europe had improved. And corporate America delivered solid better-than-expected fourth quarter 2019 earnings results, with many companies saying good things about their 2020 outlooks.

Many view the coronavirus as a delay in—not an end to—the global economic acceleration story that has been unfolding since December’s U.S.-China trade deal. That momentum has put the global economy and corporations in better positions to weather the coronavirus storm. Most likely there will be global economic impact from the coronavirus over the next several months, but investing fundamentals make the case for a rebound in the second half of this year, potentially with some help from government stimulus.

As difficult as it may be to stay the course in the face of recent market volatility, long-term investors may want to consider that approach. Based on history, it is possible that we may see a return to pre-outbreak levels of global economic growth and corporate profits within the next several months—which could continue to power this bull market and economic expansion through 2020 and possibly beyond.


TRS of Georgia and Social Security: The Good, the Bad, and the Ugly

As a former teacher, I’m honored to have the opportunity to serve many teachers as clients. From public school teachers, to private school teachers, and retired teachers of all kinds, serving those who serve our children is quite fulfilling.

Specifically, for those who serve in the Georgia public school system, there is a fantastic retirement perk that creates a financial reward, which I believe, is greatly underestimated. And that retirement perk is found through a combination of the state of Georgia pension plan, called Teacher’s Retirement System of Georgia (TRS), and the state of Georgia health insurance retirement plan.

The prevailing rhetoric is that the field of education does not pay well. But I completely disagree with that viewpoint. Although it is true that the salary of an educator is not financially lucrative, there are perks to that profession that make it compete with executive level compensation of some businesses. I’ll take a moment to explain. Because otherwise, a current teacher who reads this, might feel compelled to pick up the apple off his or her desk and throw it in my direction.

The Georgia public school system provides a generous three-fold compensation package. The first part occurs during the working years. The second part occurs during retirement. And the third part occurs as a survivorship benefit after death. Through their working years, Georgia public school employees enjoy excellent state-subsidized health insurance. And for an added cost, that health insurance is extended to their families. If you are reading this and disagree with this statement, you might find this next fact interesting. Recently, I sat down with a friend of mine. He is a self-employed consultant, and as such, he has to buy health insurance through the open marketplace. His premium, to cover his family of 4, is $2,000/month. And with that, he still has a high deductible, and after deductible, the insurance only pays 70% of covered expenses. In other words, state-subsidized health insurance costs less and covers more. And that good news gets even better in retirement. More on that in a moment.

Additionally, employment in the state of Georgia system provides other perks, such as short-term and long-term disability insurance, and basic life insurance. Also, certain counties make matching contributions to social security. Others provide contributions to a county-sponsored retirement plan, such as a 403b, or, in the case of Gwinnett County, the Gwinnett Retirement System of Georgia (GRS). Add to that, generous time off, including paid holidays, and paid vacation time (and summer break for teachers), and the total compensation package for a Georgia public school system employee is hard to match.

Although I would argue, that the financial perks and time off represent good marketing bullet points for recruiting new prospective educators into the field, it is the retirement perks that are the most lucrative, and I believe, the most under-appreciated in terms of the total compensation package for Georgia public school employees. At Calder & Colegrove, we have served clients who fully retired at the young age of 52. Think about that for a moment: retiring at age 52. If I gave you the scenario of someone retiring at age 52 without telling you anything else, you might guess that the 52-year old invented the latest and greatest social media platform. Or you might think it was a C-level executive who got one of those “golden parachutes” in retirement. But, in most cases, I doubt you would first think of a 52-year old retiree as a career Georgia public school employee.

For those who work in the private sector, retiring in their 50s is quite rate – I mean dinosaur-extinct kind of rare. And the reason for that is simple: health care costs. Even if a private-sector worker builds a big retirement nest egg, paying for health insurance in the private marketplace from their early 50s, until age 65 (Medicare), is a tall order. The cost of health insurance for someone in their 50s or early 60s, is so expensive, that we refer to it as the new mortgage payment. And it’s even worse if there are other family members to consider, such as spouse, or children (remember, health insurance covers adult children up to age 26).

So how can someone afford to retire at age 52? It’s due to the two-fold retirement package for Georgia public school system employees: the pension and the retirement health insurance. Through TRS of Georgia, retirees enjoy a pension benefit that is approximately 60% of their pre-retirement income, and that income is guaranteed for life. It’s important to take a moment and understand how that benefit is funded. As of fiscal year 2019, employees contributed 6% of their pay to TRS of Georgia. But the employer contribution rate is a whopping 20.9% equivalent of each employee’s pay, into the pension system. Imagine, in the private sector, if you contributed 6% to a 401k and received a 21% match? Yet, that’s how the contributions operate in TRS of Georgia (Source: Georgia Budget and Policy Institute).

Now, let’s look at an example of how the TRS of Georgia pension pays out in retirement. Let’s assume that a retiree works for 30 years in the system and retires with a salary of $65,000. Using the TRS of Georgia pension calculator, the retiree will enjoy a $39,000/year pension for life! And if the retiree is married, TRS of Georgia provides an option to extend the pension, after death of the retiree, to the spouse or even to the children of the retiree. So, the question is: What is a $39,000/year pension worth? In other words, if someone in the private sector wanted to enjoy a similar guaranteed payment for life – or for two lives – how much would that cost? At a conservative estimate, to create something similar for a 52-year old in the private marketplace, I believe a second to die guaranteed lifetime annuity is as close as one can get to the income from a TRS of Georgia pension. And, if that pension began at age 52, a 4% guaranteed withdrawal rate is a reasonable estimate. Therefore, if you take $39,000 and divide by 4%, the answer is $975,000. So, to describe it in simple terms, it would take about $1mm in retirement savings at age 52, to replicate the value of the TRS of Georgia Pension.

But as good as the TRS of Georgia pension is for retirees, I believe that the state health insurance retirement plan is just as lucrative of a benefit. In the private sector, few of our clients have retired with any type of legacy health insurance benefit. It’s quite rare, and it’s the exception, not the norm. But for Georgia public school employees, it is a standard part of their retirement benefit. And this benefit, is the key to providing a retirement option to someone prior to their Medicare-eligible age of 65.

The BAD:
But not everything smells like roses as it pertains to the retirement benefit of Georgia public school system employees. Georgia public school system employees are employed at the county level. And each county in Georgia was presented the option, back in the 1970s, to participate or not participate in Social Security. Gwinnett County, for example, opted out. Outside of government entities, private sector employers are required to match social security contributions, to the tune of 6.2%. Gwinnett County, on the other hand, does not. Rather, as an alternative, Gwinnett County provides supplemental salary, and makes employer contributions to the Gwinnett Retirement System of Georgia (GRS), which is a supplemental pension plan, in addition to TRS of Georgia.

If you are a Georgia public school employee, I highly recommend that you take a moment and create/log into your Social Security Statement online, and take a look at the earnings history on the last pages of your statement. Note: if you have a credit freeze in place on your credit file, you will need to temporarily remove it if you are trying to establish your account at for the first time.

If you find years with $0 credit that coincide with your years as a public-school educator, then you are working for a Georgia county that has “opted out” of Social Security. You might be wondering: is that good or bad? Like many things in life, the answer is not simple. It depends. For example, if you are a career teacher in Gwinnett County, then you have spent your career not contributing to Social Security. But let’s say that you spent half of your career in Clarke County and half of it in Gwinnett County. Clarke County participates in Social Security and Gwinnett County does not. I would advise this: if you ever consider changing counties for public school employment, make sure to ask about their participation in Social Security. Because I believe that you should stay the course in Social Security funding. Either work for a county that participates or doesn’t participate. But I wouldn’t advise working for two counties, for an extended period of time, in which one county participates in Social Security and the other doesn’t participate in Social Security. Here’s why: There is a penalty, within Social Security, that reduces the benefit of a retiree who participates in a government pension plan (like TRS of Georgia), yet, does not contribute to Social Security (such as Gwinnett County). That penalty is called the Windfall Elimination Provision (WEP). Trying to calculate how much WEP may affect your Social Security check is a complex calculation. But it is one that we perform as a regular part of our practice for clients. Although the penalty stings when one realizes that it applies to their retirement, the penalty itself, is fair. For a Gwinnett County employee (for example), there may be many years of no social security tax paid. Therefore, the benefit should reflect this fact. That’s what WEP is for. The next penalty, however, is one that I find to be quite ugly and unfair.

To better understand the “ugly” penalty from Social Security, one has to first understand the typical survivorship benefit provided by Social Security to a surviving spouse. Let’s use my wife and I as an example. Let’s say, that at my age 80, my Social Security benefit is $3,500/month. Ruthie is 4 years younger than I am, so let’s assume, at her age 76, that she’s drawing $2,500/month based on her work history. For fun, let’s imagine, in that same year, that the Georgia Bulldogs win the National Championship and the Atlanta Braves win the World Series. As a fan of both, in my advanced age of 80, my elated state is too much for my heart, and I die on the spot – with a big smile on my face. Using that example, after my passing, Social Security would provide Ruthie with the higher of the two benefit checks, but not both. So now, she would receive $3,500/month, given the example I listed above.

Now, let’s imagine that Ruthie was a career stay-at-home Mom, and did not have earned income history with Social Security. Using the same example, Ruthie would still receive a Social Security spousal benefit check once she reached her Social Security full retirement age of 67. It would be an amount equal to about half of my check. It’s a spousal benefit that was built into Social Security at its inception. Continuing with this scenario, even as a stay-at-home career Mom, Ruthie would transition to my full $3,500/month check at my death. So, to summarize, a stay-at-home spouse, with little to no earnings history, will receive a 100% survivorship check at the death of the wage-earning spouse. Keep that in mind for a moment, because this is where the Social Security penalty for Georgia public school employees gets really mean and unfair.

Government Pension Offset (GPO):
For a Georgia public school employee, who did not participate in Social Security, and draws a pension, GPO will mostly, if not completely, eliminate the survivor benefit from Social Security. Let’s go back to the example from me and my wife. Let’s say that I served a long career in Financial Planning. But let’s suppose that Ruthie was a career public school teacher in Gwinnett County. Based on the rules of WEP from Social Security, Ruthie would essentially receive no benefit check from Social Security while we are both living. As I’ve explained previously, the WEP penalty, although a real stinger, makes sense, and in my opinion, it’s fair. But now, let’s suppose that I die first at age 80. Now, rather than Ruthie enjoying the continuation of my Social Security check, it would almost certainly be reduced to $0 or near $0, as a result of GPO. Let’s summarize how bad of a deal that is: If Ruthie were a stay-at-home Mom, never earning a salary during her “working years,” she would receive a 100% survivorship benefit check from Social Security upon my death. But, as a career public school employee, due to GPO, she would likely receive no Social Security survivorship check. In other words, she would be punished for having worked outside the home. Every which way I look at GPO, it makes no sense. And recently, I ran into a very strange and unusual circumstance. I have a client, who is a part-time administrative assistant in Gwinnett County public schools. This means that she has not contributed to Social Security and is subject both to WEP and GPO. Through the process of doing her planning, I’ve determined that the Social Security benefit she is walking away from, is potentially, better for her, than is her TRS of Georgia Pension. We are still weighing the facts, but it’s possible, that it may make sense, for her to forgo her pension, so that she becomes eligible for a spousal Social Security benefit in retirement, and her husband’s Social Security survivorship benefit, assuming that he dies first.

In Conclusion
If the combination of these topics leaves you a bit confused, perplexed, and maybe even a little angry, you’re not alone. If we liken Social Security, and government pensions, to a dance, there is a lot of choreography to consider. There are many options, as it pertains to Social Security timing, TRS of Georgia pension options, and especially, survivorship options. Working with a qualified professional who is knowledgeable about this subject is vitally important. Check with your trusted professionals, from your CFP® Professional to your CPA, and inquire into their level of expertise and experience in helping you navigate this important, yet complicated subject.

Lastly, I ask that the reader of this article be careful not to misinterpret my intent. I grew up as the son of an educator. I was trained as an educator. And I’m married to an educator. As such, educators hold a special place in my heart. However, the popular sentiment of underpaid and underappreciated teachers, is an invalid argument that is used to promote increased pay and benefits, which is understandable. However, that argument, I’m afraid, also leads young people to steer clear of career education, due to perceived lack of pay and benefits. Due to the ever-changing nature of our economy, and the needs to create a more dynamic and more educated workforce for tomorrow, having the best and the brightest serve as educators is more vital now, than it has ever been. In terms of a lifetime compensation package, a Georgia public school educator’s total pay is competitive with many private sector professional positions. And I believe that the time has come, to promote that as good news, and put to bed, once and for all, the tired old story of underpaid educators in the state of Georgia.

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The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual. These are hypothetical examples and are not representative of any specific investment. Your results may vary.

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