A New Year, New Beginnings, and Reflections on 2024

We hope you had a wonderful Christmas and New Year celebration with family and friends!  We appreciated some extra time during the shortened holiday season and hope your time celebrating this year was your best yet!

Prior to finishing 2024, your Fullerton Savant Team asked one another: What are you most looking forward to saying goodbye to in 2024? Three of the four responded “election” which candidly was a bit of a surprise. We don’t really talk politics throughout the year, and that was not the reasoning. It was the interference that the election created between family members and friends. While that is behind us, we are hopeful relationships can be restored where elections may have sidetracked folks for a while.

We also looked forward as we pondered what are we most looking forward to saying “hello” to in 2025. Here, we had more traditional responses: travel, more grandchildren, exercise, getting married, having a niece or a nephew. That’s more like it! All great things to get excited about in the New Year!

We hope that you are happy to have said goodbye to something in 2024, but more importantly hope that 2025 allows you to say “hello” to something exciting and perhaps even new! We look forward to hearing all about it at your next update meeting.

Capital Market Summary

2024 was yet another strong year for the capital markets! The bull market extended, and the S&P 500 saw its second year in a row with gains of more than 20%. While we take no credit for knowing 2024 was going to be a “good” year, we did discuss the possibility that the capital markets could still be recovering from the economic woes presented by the pandemic in 2020, along with the rise of interest rates and inflation in 2022. Regardless, it is extremely unusual to have “back-to-back” years of double-digit growth in the capital markets, but we certainly will not complain!

Our memories tend to be short, which can be good and bad. 2022 was a very difficult year for investors. Inflation ran rampant with the Federal Reserve raising interest rates by over 500%. This put tremendous pressure on the capital markets causing most indices to fall into “bear territory” (defined as a 20% or greater decline).

Hindsight is 20/20. It's always obvious when we look back to explain why. But the hardest thing for all investors to do in the moment is accept the ‘why’ while looking beyond the decline and to the future. Bear market cycles come, and all bear market cycles go. How long either will last is anyone’s guess, but one should always be prepared for both by having a diversified portfolio that aligns with one’s goals and sticking with it!

So, what’s in store for 2025? The honest answer is we do not know. Nobody has that proverbial crystal ball. However, we encourage you to review your 2025 goals with your financial advisor at Fullerton Savant as we meet in the upcoming weeks and months. Along with review of your goals, we will be spending a few moments reviewing 2024 and setting proper expectations for 2025 and beyond. We look forward to assisting you with your short and long-term goals along with updating your Legacy Action Plan.

Fullerton Savant Team Update

We hope you enjoyed your most recent edition of Savant Talk (Winter 2025). You may have even noticed your Team receiving an honorable mention! We hope you see the consistencies and congruencies with Savant, formerly known as KFM, throughout Savant Talk.

This month, we welcome Jennifer (Jenny) Salgado to the Fullerton Savant Team. Jenny will be the primary point person at Fullerton Savant when you visit or call the office during normal business hours. Jenny comes to us with prior experience as a Client Service Representative from another firm in Orange County. Jenny has experience in working with our custodian Charles Schwab as well, so we anticipate a quick transition into our Team. We look forward to having you meet her personally!

We are hopeful to fully migrate our technology and data onto Savant’s platform by quarter end. Until then, we continue to run dual systems until this migration is complete. Once we are fully integrated to the new system, we will introduce many of the exciting features and benefits that come with our relationship with Savant. We greatly look forward to the completion of this migration.

Lastly, THANK YOU! 2024 exceeded the previous record established in 2023. We cannot express enough gratitude for your continued support in helping us help others with their financial goals. Your ongoing and continued recommendations to our office is one of the many reasons we joined forces with Savant in 2024.

We joined Savant knowing its mission is to “Improve the Lives of One Million People”. We have embraced this mission and even quantified it with numbers. When we look at the number of people that work with our Fullerton Savant office, we estimate we have influenced approximately 5,000 lives. While that is a pretty small number compared to 1 million, we are excited to be a part of something bigger!

As a reminder, please know your 1099’s from your custodian are generally distributed in Mid-February. As normal, they will flow from your custodian to your Client Portal where they will be found in the Documents/Statements section under “Tax Reports”.

Legislative Update: New Year, New Limits

Every year, the IRS updates tax rates, retirement contribution limits, and savings thresholds. Planning for them ahead of time in 2025 can help you take full advantage of these adjustments!

• 401(k) and 403(b) contributions limits: Increases to $23,500 for those under 50. Catch up contributions for individuals 50 and older stay at $7,500, bringing the total contribution limit to $31,000.

• New! SECURE 2.0 super 401(k) catch-up contribution: If you are between ages 60 and 63 in 2025, the enhanced catch-up contribution will be $11,250, raising the total contribution limit to $34,750.

• Total 401(k) contribution limits: The combined contribution limit for both employee and employer increases to $70,000 for individuals under 50. For those aged 50 and older, the limit rises to $77,500, and for those between 60 and 63, the total grows to $81,250.

• SEP IRA: In 2025 the limit increases to $70,000.

• Traditional and Roth IRA contribution limits: No changes! Limits remain at $7,000, or $8,000 for those eligible for catch up contributions (ages 50 and over).

• Social Security COLA increase: The cost-of-living adjustments for Social Security benefits in 2025 is 2.5%.

• Annual gift exclusion: The limit increases from $18,000 to $19,000 per recipient.

• Roth IRA phase-out range: In 2025 the Roth IRA income phase-out range increases to $150,000-$165,000 for single filers and $236,000-$246,000 for married filers.

Inherited IRA rule changes in 2025

Starting this year, certain heirs with inherited IRAs must begin taking required minimum distributions (RMDs). IRAs inherited since 2020 are subject to the 10-year rule, requiring the account to be fully distributed by the 10th year after the original account owner’s death. This rule applies to heirs who are not a spouse, minor child, disabled, or chronically ill. In July, the IRS confirmed these heirs must also start taking annual RMDs from inherited accounts if the original account owner had reached the RMD age before their passing.

Rest assured, we are closely monitoring RMD requirements across all accounts and will keep you informed accordingly. If you have any questions, please feel free to reach out to your Fullerton Savant Team.