Above the Fold  

Significant Changes Coming to Your 401(k) Plan 

Congress published the final version of a bipartisan bill on Tuesday, which is expected to pass quickly to President Biden’s desk for signature. The bill will alter the current 401(k) landscape in several ways, by first incrementally increasing the mandatory withdrawal age from 72 to 75 by 2033. Unfortunately, data suggests that 80% of people who are forced to withdraw actually take out more because they are in need of the funds. For newly created 401(k) or 403(b) plans, the legislation would require many to automatically enroll workers starting in 2025, at levels between 3% and 10%, hopefully encouraging more participation. The maximum savings rate will also increase 1% per year from the current 10% limit to 15%.  

There are other provisions that will allow older workers to deposit tax-deferred “catch-up” deposits, starting with employees over age 50. Employees will also be able to save up to $2,500 in a “rainy day” Roth account that allows money to come out free of taxes and without the 10% penalty that people under age 59½ typically owe. Americans with these retirement accounts will also see more favorable and lax restrictions when it comes to emergency withdrawals. Penalty-free withdrawals will now be available for the terminally ill, victims of domestic abuse and even for payment of certain long-term-care insurance premiums. Consumers who are impacted by federally-declared disasters will be able to pull out $22,000 penalty-free and have the option to pay the income tax over three years and/or repay the money. There are a bevy of other changes, so be sure to check with your financial professional on how the new law may affect your monetary decisions.  

Three Things                                 

Amazon Avoids Fines in EU Antitrust Suits 

The digital retail giant has agreed to settle two separate cases brought by the European Union (EU). The allegations are mainly focused on Amazon’s treatment of third-party sellers, allegedly putting them at a clear disadvantage. As part of the deal, Amazon will avoid fines and have seven years to follow through on commitments to alter its business practices, including using private information about third-party sellers to compete unfairly against them. Amazon has also promised to give its third-party sellers an equal chance at being selected as the default option for the button clicked when a consumer wants to buy an item. Those items will also be eligible to qualify for its Prime shipping program. The EU is set to gain additional powers over big tech as the Digital Markets Act (DMA) comes into effect beginning in 2024. 

Checking in on Netflix 

Shares of Netflix continue to trade mostly sideways as investors await earnings results, which are set for January 19, 2023. The streaming media pioneer is trying to reinvent itself as competition grows and consumers trim their spending. Last month, the company released its new ad-supported tier to mixed reviews. Many believe the launch was a bit premature as large swaths of desirable content were missing from the platform. And recent data from analytics firm Antenna suggested that just 9% of new Netflix subscribers signed up for the cheap ad-laden option. The low signup rate supports other reports that Netflix had to return money to advertisers after floating to meet viewership guarantees. The company said that it is still in the early days of advertising and is in it for the long haul; it also disputed the findings of the Antenna report.  

Housing Market Continues to Stumble 

Data released yesterday revealed that U.S. existing home sales fell again in November, extending the record decline to 10 months in a row. Sales of previously owned homes declined by 7.7% last month to a seasonally adjusted annualized rate of 4.09 million, the lowest since the early days of the pandemic lockdown in May 2020. In total, existing-home sales have dropped about 37% from January highs as mortgage rates linger around 7%. Home prices have also fallen for five months in a row. The data was worse than most had expected and sent stocks higher as investors hoped this might help sway the Federal Reserve’s ultra-hawkish tactics. 

In the Know                                 

Bring on the Daylight! 

Starting today (well, technically around 5 p.m. EST yesterday), people in the northern hemisphere, about 90% of the world’s population, will experience longer and longer days. The winter solstice, also called the hibernal solstice, usually occurs on Dec. 21 in America. Due to the earth’s tilt, the solstice marks the southernmost path of the sun during the year, with the north pole tilted its maximum 23.4 degrees away from the sun. And though the solstice kicks off the progression of increased daylight, it also marks the start of the astronomical winter. The meteorological winter, which encapsulates the coldest days of the year, began on Dec. 1.