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Quarterly Considerations 09/30/2017

Plan Sponsors
401(k) Rothification – With tax reform in the works, there is growing speculation that 401(k)s may be under threat. One idea under consideration is to tax 401(k) contributions upfront, thereby reducing or eliminating pre-tax benefits.

Audit Activity – The Department of Labor plans to increase defined benefit plan audits. Their focus is to ensure terminated vested participants are properly receiving pension benefits.

Nonprofit Organizations
PE Trend – While buyout private equity funds continue to attract near-record capital commitments, mega-funds accounted for nearly half of all capital raised in 2017 (Pitchbook). Mid market funds may be better suited to navigate in such an environment. Ask us for more information on other recent PE trends.

Private Clients
Tax Attack – On September 27th, the Trump Administration released a framework for tax reform including creating three individual tax brackets of 12%, 25%, and 35%, repealing the AMT, repealing the estate tax, and reducing the corporate tax rate to 20%, among other initiatives. We are continuing to monitor the situation closely and can answer questions about how these proposals may impact your personal investment strategy.

Storm Surge – Investors are closely watching the municipal bond markets in the wake of the disastrous hurricanes that ravaged Texas, Florida, and Puerto Rico. So far, muni markets are proving resilient and the storms have had little impact on bond prices outside of Puerto Rico. We prefer high-quality muni bond managers with little-to-no exposure to Puerto Rico bonds to ensure munis remain one of the least volatile asset classes in a broadly diversified portfolio.

Losses to Win! – While returns across most asset classes have been strong in 2017, there could remain opportunities to harvest losses, particularly in commodity and
energy investments, to offset future gains. We perform a comprehensive loss-harvesting analysis for every client at least annually.

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