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Dorion-Gray Capital Management® Weekly Commentary September 18, 2017

| September 19, 2017
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Wall Street achieved record highs on Friday as the S&P 500 crossed the 2,500 point threshold as telecommunications shares rose and technology stocks recovered after two days of declines. For the week, the Dow rose 2.19 percent to close at 22,268.31. The S&P gained 1.63 percent to finish at 2,500.23, and the NASDAQ rose 1.39 percent to end the week at 6,448.47.

10 Positive Months  The S&P 500 gained 0.3 percent (total return) in August 2017, its 10th consecutive positive month. The last time the S&P 500 had a streak this long was the 10 consecutive months that ended in September 1995 (source: BTN Research).

Missing Out  Every income group reporting up to $200,000 of household income has a participation percentage in the stock market of 40% or less. For example, only 40% of American households reporting between $100,000-$199,999 of income invest in the stock market, while the percentage falls to just 20% for households reporting $50,000-$74,999 of income (source: Federal Reserve Bank of St. Louis).

October, Best and Worst - The three best gain days (by percentage) for the S&P 500 in the last 67+ years (i.e., dating back to Jan. 1950) all occurred during October. Five of the seven largest loss days (by percentage) for the S&P 500 over the same time period occurred during the month of October (source: BTN Research). 

Weekly Focus - Things You Can Do With a 401(k) but Not an IRA

Each type of retirement account has its own advantages and disadvantages. Today, we’ll look at some things you can do with a 401(k) you can’t do with an IRA, such as:

Lower tax bills, regardless of income or age. While there are income and age limits to contribute to traditional IRAs and income limits to contribute to individual Roth IRAs, if you are still employed, you can contribute the maximum amount allowed to your employer’s 401(k) irrespective of your income level or your age. For 2017, this means you can contribute $18,000 if you’re under 50 or $24,000 if you are 50 or older.

Postpone RMDs. With no exceptions, required minimum distributions must begin from a traditional IRA when you reach age 70½. But as long as you are still working for the company that sponsors your 401(k), are considered an employee (even if you’re working nominal hours) and don’t own more than 5 percent of the company, you will not be required to take RMDs from your 401(k).

Take earlier penalty-free withdrawals. Although there is typically a penalty for IRA or 401(k) withdrawals before age 59½, you may take a penalty-free withdrawal from a 401(k) if you are 55 or older and retire or leave your employer.

Contribute to a Roth, regardless of income. You can contribute to an individual Roth IRA only if your modified adjusted gross income falls below the legal limit. However, more employers are offering Roth 401(k) options. Like a traditional 401(k), there are no income limits for salary deferrals.

Take a loan. While it should be a last resort, you may be able to borrow from your 401(k) if your plan includes a loan provision. If it does, you will likely be required to pay it back in fairly equal payments, including interest, within five years.

Just as there are benefits and drawbacks for different types of retirement accounts, there are pros and cons for consolidating accounts. Having too many retirement accounts may make it harder to manage your asset allocation and cost more in fees, but maintaining a few different types can increase flexibility before retirement and tax options in retirement. Our office would be happy to help you decide what type of account seems best for your situation or weigh consolidating your existing accounts

The Dorion-Gray Team

Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. a Registered Investment Advisory Firm. Dorion-Gray Retirement Planning is a trade name of Dorion-Gray Financial Services, Inc. located at 2602 IL Route 176, Crystal Lake, IL  60014.  Dorion-Gray and the Securities America companies are separate, unaffiliated entities. 

Diversification seeks to reduce the volatility of a portfolio by investing in a variety of asset classes.  Neither asset allocation nor diversification guarantee against market loss or greater or more consistent returns

© 2017. Dorion-Gray Financial Services, Inc.

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