A Historical Perspective of Mega IPOs

With speculation mounting around potential blockbuster offerings — most notably SpaceX — the IPO market is generating significant investor enthusiasm. Yet a careful review of historical data offers an important counterpoint to that excitement. Among the ten largest U.S. initial public offerings since 1999, measured by deal size, every single one produced a negative return over the twelve months that followed their market debut.

The pattern is striking: an average one-year forward return of -26.8% across the ten largest offerings since 1999 suggests that mega-IPOs tend to arrive overpriced, riding the crest of maximum market enthusiasm. For investors, the lesson is clear — the size of an offering and the volume of media attention surrounding it are not reliable predictors of near-term performance. As always, disciplined valuation and a long-term perspective remain essential, even when the headlines make a new listing feel like a once-in-a-generation opportunity.

Key Takeaway: History suggests that the most celebrated IPOs carry the highest expectations — and those expectations are rarely met within the first year of trading. Proceed with measured caution.

(as of Monday’s Market Opening)

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Disclosures

1. Wealth Mechanics™ is a registered trademark of Cestia Wealth Management. Unauthorized use of the trademark, including but not limited to commercial use, reproduction, or imitation without explicit written permission from Cestia Wealth Management, is strictly prohibited.
2. Market commentary provided by NewEdge Advisors
3. Charts concerning market data are provided by Exhibit A.
4. Guides and other downloadable firm material respective to financial planning processes and data are provided and powered by fpPathfinder.
5. Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. Securities offered through NewEdge Securities, LLC. Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC.
6. Cestia Wealth Management is not a legal tax professional. We offer tax gap analysis for clients who desire to have a comprehensive financial plan, which requires in-depth tax strategy and planning as a distinct part of the overall customized solution. Please consult your tax professional on all matters addressed in this report.
7. Information about annuities are not to be considered a recommendation. The information provided should not considered a recommendation to purchase or sell any particular security.
8. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.

The post Week Ending May 29, 2026 appeared first on Cestia Wealth Management.

Bond Yields are Historically Linked with Forward Returns

One of the more enduring relationships in fixed income markets is the link between the U.S. 10-Year Treasury’s starting yield and its forward 10-year annualized return. Plotting this relationship back to 1999 reveals a consistent pattern: the yield at which an investor begins their holding period has historically been a meaningful indicator of the return they can expect to earn over the subsequent decade.

Applying that historical relationship to today’s market, the current 10-Year Treasury yield of approximately 4.6% implies a forward 10-year annualized return of roughly 5.6%. It is worth emphasizing that this figure is a single point estimate drawn from past data — it is not a forecast, and it does not account for the path of rates, inflation, or credit conditions that will ultimately shape realized returns.

The broader takeaway is one of context rather than prediction. Higher starting yields have historically been associated with stronger forward returns for bondholders, which is why the level of rates today may serve as a reasonable anchor for setting return expectations within a diversified portfolio. As always, the historical relationship may not persist, and actual future returns may differ materially from what past data suggests. Still, for clients evaluating the role of fixed income in their long-term plan, today’s yield environment offers a more constructive starting point than has been available in much of the past fifteen years.

A Foundation in Digital Assets, Part 1: What Is Blockchain?

Before clients can meaningfully evaluate cryptocurrencies, stablecoins, or decentralized finance, it helps to begin with the underlying technology that makes all of them possible: blockchain.

At its simplest, a blockchain is a shared digital record of transactions. Rather than being stored on a single company’s server — the way a bank maintains your account balance — the record is distributed across a network of computers that each hold an identical copy. When a new transaction occurs, the network collectively verifies it, and once added to the record, the entry cannot be altered without the consensus of the network.

Two features make this design notable. The first is transparency: every participant can see the same ledger, which reduces the need to trust any single intermediary. The second is immutability: once recorded, entries are extremely difficult to change, which creates a permanent, auditable history.

Blockchain is the technology layer. It is not, by itself, an investment. Bitcoin, Ethereum, and the broader universe of digital assets are applications built on blockchain — much in the way that email and online banking are applications built on the internet. Understanding this distinction is the first step in evaluating the asset class with clarity.

In the next installment, we will examine the difference between digital currency and cryptocurrency — terms that are often used interchangeably but describe meaningfully different things.

Source: Educational framework adapted from materials published by the Digital Assets Council of Financial Professionals (DACFP), an independent educational organization recognized by the CFP Board of Standards, CFA Institute, and listed in FINRA’s database of professional designations.

(as of Monday’s Market Opening)

Global Client Survey

We’re inviting you to take part in a quick, anonymous client survey. Your feedback helps us fine-tune our process, elevate your experience, and ensure we’re delivering what matters most to you. This isn’t just about checking a box—it’s about shaping the future of how we serve you. Your voice helps guide our next steps. We’re listening. We’re learning. And we’re grateful for your trust.

Take Our Survey Now (click here)

Disclosures

1. Wealth Mechanics™ is a registered trademark of Cestia Wealth Management. Unauthorized use of the trademark, including but not limited to commercial use, reproduction, or imitation without explicit written permission from Cestia Wealth Management, is strictly prohibited.
2. Market commentary provided by NewEdge Advisors
3. Charts concerning market data are provided by Exhibit A.
4. Guides and other downloadable firm material respective to financial planning processes and data are provided and powered by fpPathfinder.
5. Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. Securities offered through NewEdge Securities, LLC. Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC.
6. Cestia Wealth Management is not a legal tax professional. We offer tax gap analysis for clients who desire to have a comprehensive financial plan, which requires in-depth tax strategy and planning as a distinct part of the overall customized solution. Please consult your tax professional on all matters addressed in this report.
7. Information about annuities are not to be considered a recommendation. The information provided should not considered a recommendation to purchase or sell any particular security.
8. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.

The post Week Ending May 22, 2026 appeared first on Cestia Wealth Management.

Among the most consequential decisions a retiree faces, few receive the careful attention they deserve. How a portfolio balances stocks and bonds over time — and how that balance coordinates with guaranteed income sources such as Social Security — can be the difference between a retirement that sustains itself comfortably and one that comes up short when it matters most.

A 2024 study published in the <em>Journal of Financial Planning</em> examined these questions with rigorous depth, exploring how guaranteed income, risk tolerance, bequest objectives, and asset allocation strategies interact across thousands of simulated retirement scenarios. The findings are, in several respects, counterintuitive — and for that reason, they deserve the attention of anyone who is planning for or already living in retirement.

“One of the biggest threats to a portfolio’s success at providing lifetime income is a big loss in value early, rather than later, in retirement.”

Waggle and Agrrawal, June 2024

A glide path describes how a portfolio’s allocation between stocks and bonds is designed to evolve over time. The conventional approach — reflected in most target-date retirement funds — calls for holding a higher proportion of equities during working years, then gradually shifting toward bonds as retirement approaches and progresses. The rationale is grounded in sound logic: bonds offer more stability, and a retiree who experiences a significant market loss does not have the time or future income to recover from it.

The researchers examined five distinct glide path strategies, each representing a different trajectory for equity allocation across a 30-year retirement horizon:

• Decreasing Fast</strong> — equity allocation falls by 40% over 30 years
• Decreasing Slow</strong> — equity allocation falls by 20% over 30 years
• Constant</strong> — equity allocation is rebalanced to its starting level each year
• Slow</strong> — equity allocation rises by 20% over 30 years
• Increasing Fast</strong> — equity allocation rises by 40% over 30 years

Starting equity allocations from 0% to 100% were tested across each glide path — a total of 43 unique portfolio strategies — and each was evaluated across 1,000 Monte Carlo simulations using long-term return and inflation assumptions for large-cap equities and 10-year Treasury bonds.

The Role of Social Security

The study’s most practically significant finding centers on Social Security — and on the cost of ignoring it. Many portfolio analyses treat the investable portfolio in isolation, as though guaranteed income streams do not exist. The researchers found that this approach leads to meaningfully different, and often suboptimal, portfolio recommendations.

For retirees with moderate or high risk aversion, factoring Social Security into the analysis typically points toward a higher initial equity allocation than an analysis that excludes it would suggest. At first glance, this may seem to work against conventional wisdom. But the underlying logic is sound: guaranteed income functions as a floor. When a meaningful portion of living expenses is covered regardless of market conditions, the investable portfolio can take on more measured risk in pursuit of long-term growth — particularly for those with goals around legacy and wealth transfer.

The study expressed wealth in terms of the ratio of investable assets to the present value of Social Security, examining scenarios in which Social Security represented 75%, 33%, and 17% of overall wealth. As Social Security’s proportional share increased, the case for higher initial equity allocations in the remaining portfolio strengthened accordingly.

Portfolio success rates

The first lens through which the research evaluated these strategies was straightforward: could a given portfolio sustain inflation-adjusted withdrawals for the full retirement period without being exhausted? Three withdrawal rates were examined — 3%, 4%, and 5% of initial portfolio value — across retirement horizons ranging from 20 to 40 years.

The results illustrate a familiar tension. At a 3% withdrawal rate, a wide range of glide paths succeeded across most time horizons, providing planners and clients with meaningful flexibility. At 4%, outcomes began to diverge meaningfully depending on starting equity levels and glide path direction. At 5%, the picture becomes considerably more challenging, particularly for retirement horizons extending 35 to 40 years — where even the best-performing strategies fell well short of certainty.

The tables below are reproduced directly from the original research. The top three performing glide paths for each scenario are ranked 1 through 3

Table 2 — Portfolio Success Rates

Table 3 — Portfolio Success Rates: 3% Withdrawal Rate

Table 4 — Portfolio Success Rates: 4% Withdrawal Rate

Table 5 — Portfolio Success Rates: 5% Withdrawal Rate

Beyond success rates: the utility framework

A binary success-or-failure measure, while useful, has inherent limitations. A portfolio that provides income for 30 years and leaves one dollar in the account is technically “successful” — yet it tells a fundamentally different story than one that sustains withdrawals and leaves a meaningful inheritance for heirs. Likewise, for a retiree whose Social Security covers the majority of living expenses, a portfolio shortfall carries far less consequence than for someone whose portfolio bears the full weight of retirement income.

To capture this complexity, the researchers applied a constant relative risk aversion (CRRA) utility framework that evaluates outcomes across three dimensions simultaneously: the percentage of desired income actually received each year, the retiree’s level of risk aversion, and the strength of their preference for leaving a financial legacy. The result is a ranking of all 43 glide path strategies from most to least optimal — not merely by survival, but by the quality of the retirement experience as the individual retiree would realistically value it.

Key findings and their implications

Several conclusions from this research stand apart as especially relevant for clients approaching or navigating retirement.First, ignoring Social Security distorts the analysis. When the research compared optimal portfolios with and without Social Security factored in, the recommended strategies diverged substantially — particularly for retirees with moderate or high risk aversion. In some cases, the optimal starting equity allocation shifted by 20 to 30 percentage points depending on whether guaranteed income was included. Financial plans that treat the investable portfolio in isolation are, by definition, working with an incomplete picture.

Second, rising glide paths merit serious consideration. Conventional guidance directs retirees to reduce equity exposure over time. The research found that for a broad range of investor profiles — especially those with bequest goals — increasing equity allocations throughout retirement frequently produced superior utility outcomes. The logic is intuitive once examined: beginning with a more conservative allocation reduces vulnerability to the sequence-of-returns risk that most threatens early retirees, while the gradual increase in equity exposure supports long-term growth as the portfolio establishes its footing.

Third, the optimal path is deeply personal. Risk aversion, bequest preferences, withdrawal rates, and the size of Social Security relative to total wealth all interact to produce different optimal outcomes. There is no universal answer — only an answer that is right for a given individual, in a given set of circumstances, with a given set of goals.

What this means for you

Retirement planning, at its best, is an act of precision. The research summarized here affirms what we at Cestia have long believed: the decisions that shape retirement outcomes should be engineered around the full reality of your financial life — your income sources, your risk profile, your time horizon, and what you want your wealth to accomplish for the people and causes you care about.

Social Security is a genuine and material asset. Its guaranteed, inflation-adjusted income stream fundamentally changes the construction of an optimal retirement portfolio. A rising glide path, starting conservatively and building equity exposure as the portfolio matures through the critical early retirement years, may deliver meaningfully better outcomes for many retirees — not despite their caution, but because of it.

References

Doug Waggle, Ph.D., and Pankaj Agrrawal, Ph.D. (2024). Guaranteed Income and Optimal Retirement Glide Paths.Journal of Financial Planning, 37(6), 74–94,

Disclosures

1. Cestia Wealth Management is not a legal tax professional. We offer tax gap analysis for clients who desire to have a comprehensive financial plan, which requires in-depth tax strategy and planning as a distinct part of the overall customized solution. Please consult your tax professional on all matters addressed in this report.
2. Wealth Mechanics™ is a registered trademark of Cestia Wealth Management. Unauthorized use of the trademark, including but not limited to commercial use, reproduction, or imitation without explicit written permission from Cestia Wealth Management, is strictly prohibited.
3. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.
4. Citations to Internal Revenue Code sections, Treasury regulations, IRS notices and revenue procedures, and Tax Court decisions reflect guidance and case law in effect as of the date of publication and are subject to change.
5. Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. Securities offered through NewEdge Securities, LLC. Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC.
6. This material was prepared with the assistance of AI.  All content has been reviewed, edited, and approved by Cestia Wealth Management prior to use.

The post Rethinking the Glide Path: What Research Tells Us About Social Security and Your Retirement Portfolio appeared first on Cestia Wealth Management.

Fidelity’s 2026 midyear outlook: Preparing for what’s to come in the economy

Key takeaways

Will I Avoid IRMAA Surcharges On Medicare Part B & Part D?

Planning around Income-Related Monthly Adjustment Amount (“IRMAA”) surcharges has become more important as the Medicare premium increase amount has grown in recent years. While on the surface the concept is pretty straightforward, there are a few issues that can cause an unexpected wrinkle for your clients. It can be difficult to avoid pitfalls, and to recognize when a client may be able to request an exception from the IRMAA surcharge.

To help make this easier, we have created the “Will I Avoid IRMAA Surcharges On Medicare Part B & Part D” flowchart. It addresses some of the most common issues that arise for a client on Medicare, including:

• IRMAA surcharges for Part B and Part D based on MAGI ranges
• Situations to request an exception and the form to complete
• Relevant tax year for the surcharge calculation

(as of Monday’s Market Opening)

Global Client Survey

We’re inviting you to take part in a quick, anonymous client survey. Your feedback helps us fine-tune our process, elevate your experience, and ensure we’re delivering what matters most to you. This isn’t just about checking a box—it’s about shaping the future of how we serve you. Your voice helps guide our next steps. We’re listening. We’re learning. And we’re grateful for your trust.

Take Our Survey Now (click here)

Disclosures

1. Wealth Mechanics™ is a registered trademark of Cestia Wealth Management. Unauthorized use of the trademark, including but not limited to commercial use, reproduction, or imitation without explicit written permission from Cestia Wealth Management, is strictly prohibited.
2. Market commentary provided by NewEdge Advisors
3. Charts concerning market data are provided by Exhibit A.
4. Guides and other downloadable firm material respective to financial planning processes and data are provided and powered by fpPathfinder.
5. Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. Securities offered through NewEdge Securities, LLC. Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC.
6. Cestia Wealth Management is not a legal tax professional. We offer tax gap analysis for clients who desire to have a comprehensive financial plan, which requires in-depth tax strategy and planning as a distinct part of the overall customized solution. Please consult your tax professional on all matters addressed in this report.
7. Information about annuities are not to be considered a recommendation. The information provided should not considered a recommendation to purchase or sell any particular security.
8. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.

The post Week Ending May 15, 2026 appeared first on Cestia Wealth Management.

The Pitch You May Have Heard

A micro-captive insurance arrangement is a powerful tax-and-risk planning structure where a profitable business creates—or participates in—a small insurance company that elects under Internal Revenue Code §831(b) to be taxed only on its investment income. In concept, the structure allows a business to insure its own risks, deduct the premiums it pays, and accumulate reserves tax-efficiently. In practice, the version most often pitched to mid-market business owners has become one of the most heavily scrutinized arrangements in federal tax law.

If you own a profitable business, chances are someone has already presented this strategy to you. The promise typically sounds compelling:

• A six- or seven-figure annual deduction against operating income
• Tax-advantaged reserve buildup that grows outside the operating business
• Coverage for risks that are difficult to insure commercially—loss of key person, loss of key customers, brand rehabilitation, cyber liability, regulatory actions
• An eventual exit at long-term capital gains rates, or with no federal tax at all if the rights are placed inside a trust, retirement plan, or private placement life insurance policy

The pitches are sophisticated and often delivered by polished promoters with persuasive case studies. They deserve a careful, fact-based response. At Cestia Wealth Management, we believe wealth is a verb, not a noun—and that distinction matters most in moments like these. A real wealth-building tool earns its place by what it does in real life, not by what it promises on a slide deck. The honest answer is that captive insurance can be a legitimate planning strategy, but the version most commonly marketed to mid-market business owners deserves the same rigor you would bring to any consequential financial decision.

How Captive Insurance Actually Works

A captive is an insurance company owned by, or affiliated with, the business it insures. Large corporations have used captives for decades to manage genuine risks the commercial market either will not cover or prices punitively. Under §831(b), a small captive earning $2.85 million or less in annual premiums (the 2025 threshold) can elect to pay tax only on investment income.

The statute was enacted to give legitimate small captives a workable tax framework—not to create a tax-deferral vehicle for operating income. When structured thoughtfully, a captive can replace or supplement commercial coverage with policies tailored to your business’s actual exposures, build a reserve that supports a true claims function, and provide leverage in negotiations with commercial insurers. These are real, meaningful benefits. The challenge is that they are often not the benefits being sold in promoter pitches.

What the IRS Has Said—Repeatedly

Since 2015, the IRS has included micro-captive arrangements on its annual “Dirty Dozen” list of abusive tax schemes nearly every year. Puerto Rico–domiciled and other foreign captive arrangements have been called out specifically.

The pattern the IRS has challenged repeatedly tends to follow a recognizable shape:

1. An operating business deducts large premiums paid to a related captive insurer
2. The insured risks are exotic, remote, duplicative of existing coverage, or otherwise unlikely to produce claims
3. Premiums are not actuarially determined — they are sized to a desired tax outcome
4. The captive pays few or no claims, year after year
5. Reserves accumulate inside the captive, taxed favorably
6. Funds eventually return to the owner through dividends, loans, transfers, or structured “exit” mechanisms at preferential rates

In the IRS’s view, this is not insurance. It is a tax shelter wearing an insurance costume. The Service has had remarkable success defending that view in court.

The Track Record in Court

The IRS has prevailed in nearly every contested micro-captive case to reach the Tax Court since 2017. The leading decisions include:

• Avrahami v. Commissioner, 149 T.C. 144 (2017) — the first major taxpayer loss. The court found the arrangement lacked genuine risk distribution and did not constitute insurance in the commonly accepted sense.
• Reserve Mechanical Corp. v. Commissioner, T.C. Memo. 2018-86, affirmed 34 F.4th 881 (10th Cir. 2022) — similar findings against an offshore captive in Anguilla.
• Syzygy Insurance Co. v. Commissioner, T.C. Memo. 2019-34 — premiums far in excess of actuarial support; coverages that duplicated existing commercial policies.
• Caylor Land & Development, Inc. v. Commissioner, T.C. Memo. 2021-30 — circular flow of funds; the captive was not operated as a bona fide insurer. Notably, this was the first micro-captive case in which the Tax Court sustained accuracy-related penalties.

Across these cases, courts have applied a consistent four-part framework derived from the Supreme Court’s decision in Helvering v. Le Gierse, 312 U.S. 531 (1941). A true insurance arrangement must involve (1) insurance risk, (2) risk shifting, (3) risk distribution, and (4) the commonly accepted meaning of insurance. Promotional structures repeatedly fail one or more of these tests.

The January 2025 Final Regulations

On January 14, 2025, the Treasury Department and IRS finalized regulations (T.D. 10029, 90 Fed. Reg. 3534), codified at Treasury Regulations §§1.6011-10 and 1.6011-11, classifying certain micro-captive arrangements as listed transactions—the most serious category of reportable transaction—and others as transactions of interest. For business owners participating in these arrangements, the implications are significant.

Both classifications carry meaningful consequences:

• Participants must file Form 8886 (Reportable Transaction Disclosure Statement); material advisors must file Form 8918
• Penalties for failure to disclose are separate from any tax adjustment. Listed-transaction non-disclosure penalties under §6707A can run as high as $200,000 per failure for entities
• Accuracy-related penalties can range from 20% to 40%, with up to 75% available for gross valuation misstatements, plus interest
• Disclosure obligations reach back to any tax year still open under the statute of limitations
• The IRS concurrently issued Revenue Procedure 2025-13, providing a streamlined method to revoke a §831(b) election for taxpayers who wish to exit

A first wave of disclosures was due in April 2025, with relief extended through July 31, 2025 under Notice 2025-24. The regulations are facing legal challenges from industry participants, and those cases may eventually modify the regulations’ reach. They will not, however, retroactively protect taxpayers whose underlying arrangements fail the four-part insurance test the courts have already articulated.

Red Flags in the Pitch

If you have been pitched a captive insurance proposal—or you are an advisor whose client has been—the following signals warrant serious scrutiny. Each represents a pattern the IRS and the Tax Court have specifically identified in arrangements they have rejected.

1. Tax benefits are the headline.

Real insurance is purchased for risk management; favorable tax treatment is a secondary effect. When a presentation devotes more time to “income tax arbitrage,” “exit at long-term capital gains,” or “assets manufactured with pre-tax dollars” than to claims handling and underwriting, the priority is being made explicit.

2. The coverages duplicate existing policies or insure improbable risks.

Loss of key person, loss of key supplier, and brand rehabilitation are real exposures. In many marketed structures, however, they overlap with coverage the business already carries, or are written so narrowly that claims are unlikely to occur.

3. Premiums are not based on an independent actuarial study.

Legitimate captives engage qualified actuaries to price coverage based on the insured’s loss experience and exposure. Reverse-engineering premiums from a desired deduction is a hallmark of the structures the IRS has challenged successfully.

4. The captive pays few or no claims.

A loss ratio under 30% over time is, by the IRS’s own threshold, a signal of a listed transaction. A captive that “never has claims” is not functioning as insurance.

5. The exit strategy is more developed than the risk-management strategy.

Promotional materials that detail PPLI wrappers, IRA placements, dynasty trust structures, and option-based cash settlements before they describe the underwriting process are telling on themselves.

6. The captive is offshore without a business reason.

Puerto Rico, Bermuda, the Cayman Islands, and similar jurisdictions can host legitimate captives. The choice of jurisdiction should be driven by regulatory and economic factors, not solely by tax. The IRS has specifically flagged Puerto Rican captive arrangements in its Dirty Dozen guidance and has an active compliance campaign on Puerto Rico Act 22/60 investor structures.

7. The promoter discourages independent legal review.

No legitimate planner should object to independent counsel — chosen by the client, not by the promoter — reviewing the structure before implementation.

What a Legitimate Captive Looks Like

This is not an argument that every captive is abusive. Captive insurance is a real and useful risk-management tool when the structure is built around the four pillars of insurance:

• Real risks your business actually faces and that are not already adequately addressed
• Premiums supported by independent actuarial analysis tied to those risks
• Genuine claims activity processed through documented procedures
• Operation as a real insurer—adequate capitalization, regulatory compliance in the domicile, true underwriting discipline

When those conditions hold, a captive can both manage risk efficiently and produce tax-favorable outcomes that are a legitimate consequence of insurance economics—not the primary purpose of the structure.

Michael Kitces, Head of Planning Strategy at Focus Partners Wealth and publisher of the Nerd’s Eye View blog, has written thoughtfully about §831(b) captives from a planner’s perspective. While acknowledging the concept as a legitimate strategy historically used by larger businesses, he observes that the tax savings are ultimately a form of tax deferral with some rate arbitrage, and that the setup and ongoing administrative costs of operating a real insurance company rarely justify the structure unless the business is already paying substantial commercial premiums and has many millions in revenue. His broader caution—echoed across the planning profession—is that most arrangements pitched primarily on tax savings “don’t hold up at all once the math is really scrutinized.”

Key Considerations Before You Sign On

If a captive arrangement is on your desk, a measured due-diligence path looks like this:

1. Identify the real risk-management problem the captive is meant to solve, documented independently of the promoter’s framing.
2. Engage independent tax counsel—not selected or paid by the promoter—with specific litigation experience in micro-captive cases.
3. Obtain an independent actuarial study sized to your actual exposures.
4. Review the four-pillar insurance tests against the proposed structure with the CPA who will sign the return that takes the deduction.
5. Understand the disclosure obligations under T.D. 10029 in advance. Determine whether the arrangement will require Form 8886 reporting.
6. Read the actual policies. Coverages, exclusions, claims procedures, and definitions must be specific and meaningful.
7. Verify the captive’s operations. Capitalization, claims history, underwriting standards, and regulatory standing in the domicile should all withstand scrutiny.

Key Considerations If You Are Already Participating

If you are currently part of a micro-captive arrangement, the appropriate response depends on the structure’s substance—not on the promoter’s reassurances:

• Determine your disclosure obligations under T.D. 10029 immediately. The deadlines are not optional.
• Have the arrangement independently audited for insurance substance—by an advisor who is not the promoter.
• Consider Revenue Procedure 2025-13 for streamlined §831(b) revocation if the captive cannot be made compliant.
• Consult independent tax counsel about amended returns, voluntary disclosure options, and accuracy-related penalty exposure.
• Do not rely on assurances from material advisors who themselves have disclosure and penalty exposure tied to the transaction.

Conclusion

By thoughtfully evaluating these factors with independent counsel and a clear-eyed view of the substance underneath the structure, you can determine whether a captive insurance arrangement genuinely supports your business and your wealth strategy—or simply puts both at risk. The math, the marketing, and the regulatory landscape all deserve the same scrutiny you would bring to any consequential financial decision.

At Cestia Wealth Management, we believe wealth is a verb, not a noun. The decisions you make under pressure—including which strategies you say yes to, and which you decline—are part of the story your wealth tells. Captive insurance, used thoughtfully, can be a meaningful part of that story. Used incautiously, it can become a costly chapter you would rather not write.

This is precisely the kind of decision where Advice Alpha—the excess return generated by thoughtful, independent guidance—is built. When the math is complex, the marketing is polished, and the stakes are high, our role is to bring clarity.

We are not anti-captive. We are pro-substance. A legitimate captive insurance arrangement can be a powerful planning tool for the right business in the right circumstances. The version most frequently marketed to mid-market business owners, however, deserves rigorous review before you participate—and an honest reassessment if you already do.

References

Avrahami v. Commissioner, 149 T.C. 144 (2017).

Bloomberg Tax. (2023, April 14). Microcaptives to find one tax penalty tougher to beat.

Caylor Land & Development, Inc. v. Commissioner, T.C. Memo. 2021-30 (U.S. Tax Court 2021).

Cherry Bekaert. (2025, February 20). Micro-captive insurance: IRS final regulations. 

CIC Services, LLC v. Internal Revenue Service, No. 3:17-cv-110 (E.D. Tenn. Mar. 21, 2022).

Helvering v. Le Gierse, 312 U.S. 531 (1941).

Internal Revenue Code, 26 U.S.C. §§ 162, 831(b), 6662, 6707A (2024).

Internal Revenue Service. (n.d.). Abusive tax shelters and transactions. 

Internal Revenue Service. (n.d.). Dirty Dozen tax scams.

Internal Revenue Service. (2025). About Form 8886, Reportable Transaction Disclosure Statement. 

Internal Revenue Service. (2025). About Form 8918, Material Advisor Disclosure Statement.

IRS Notice 2025-24 (extending initial micro-captive disclosure deadline to July 31, 2025).

Kitces, M. (2019). 831(b) captive insurance companies: A legit tax strategy? Nerd’s Eye View.

KPMG. (2025, January 10). Final regulations: Micro-captive listed transactions and micro-captive transactions of interest. 

Plante Moran. (2025, March 10). Final regulations on micro-captive insurance transactions. 

Reserve Mechanical Corp. v. Commissioner, T.C. Memo. 2018-86 (U.S. Tax Court 2018), aff’d, 34 F.4th 881 (10th Cir. 2022).

Rev. Proc. 2025-13 (streamlined process for revoking a § 831(b) election).

RSM US LLP. (2025, March 24). Final regulations make micro-captive insurance arrangements listed transactions. 

Syzygy Insurance Co. v. Commissioner, T.C. Memo. 2019-34 (U.S. Tax Court 2019).

The Tax Adviser. (2025, June). Microcaptive insurance arrangements subject to new rules. American Institute of Certified Public Accountants. 

Winston & Strawn LLP. (2025, February 4). Micro-captive reportable transactions regulations finalized; challenged. 

Disclosures

1. Cestia Wealth Management is not a legal tax professional. We offer tax gap analysis for clients who desire to have a comprehensive financial plan, which requires in-depth tax strategy and planning as a distinct part of the overall customized solution. Please consult your tax professional on all matters addressed in this report.
2. Wealth Mechanics™ is a registered trademark of Cestia Wealth Management. Unauthorized use of the trademark, including but not limited to commercial use, reproduction, or imitation without explicit written permission from Cestia Wealth Management, is strictly prohibited.
3. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.
4. Citations to Internal Revenue Code sections, Treasury regulations, IRS notices and revenue procedures, and Tax Court decisions reflect guidance and case law in effect as of the date of publication and are subject to change.
5. Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. Securities offered through NewEdge Securities, LLC. Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC.
6. This material was prepared with the assistance of AI.  All content has been reviewed, edited, and approved by Cestia Wealth Management prior to use.

The post Evaluating Micro-Captive Insurance: A Mindful Review of a Marketed Tax Strategy appeared first on Cestia Wealth Management.

April Market & Economic Summary

If you did not read the email last week, here’s your chance. In short — earnings growth has accelerated to 24.8% on a forward basis, the U.S. economy is tracking 3.7% real GDP growth for Q2, the labor market remains firm, and energy now consumes a far smaller share of household budgets than in prior cycles. The report also includes historical data on forward returns from all-time highs that I think provides useful context for the months ahead.

Download Our April Market & Economic Update

The SEC and CFTC’s latest crypto guidance

The US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) issued a joint interpretation clarifying how federal securities laws apply to certain crypto assets and crypto transactions. After more than a decade of regulatory ambiguity regarding digital assets, the guidance delivered a major step toward what the crypto industry has long awaited: a clear framework defining how specific digital assets are treated by federal law.

Let’s explore some of the specifics of this pivotal guidance, and what it might mean for investors.

Equities

• U.S. equity markets rose for the sixth consecutive week as stronger-than-expected corporate earnings and hopes of a peace deal kept investors in a jovial mood.
• The S&P 500 ended the week up 2.4%, while the Nasdaq finished up 4.5%.
• As we enter the final innings of earnings season, earnings continue to improve, with first-quarter earnings now expected to rise 27.7% — the strongest growth rate since the fourth quarter of 2021.
• Large-cap growth stocks resumed their leadership role, outperforming their value counterparts by a wide margin for the fifth of the past six weeks.
• Information technology surged over 7% last week, led by semiconductor companies, as another wave of AI enthusiasm and strong earnings growth lifted the sector higher.
• The energy sector hit the bottom of the S&P 500 leaderboard, sliding 5.3% on the back of declining oil prices.
• Utilities and financials followed suit as investors shifted capital away from defensive areas and into high-beta tech and growth stocks.
• International markets were up last week, led by Emerging Markets, which returned nearly 7%, driven by strength out of South Korea and Taiwan stocks.

Bonds

• Yields remained roughly in line with where they finished the prior week, trading in tandem with oil prices as the market repriced inflation expectations.
• The 10-year Treasury yield finished the week a basis point lower at 4.38%, while the 2-year Treasury yield rose slightly to 3.90%, resulting in a 2–10 spread of 48 basis points.
• The Bloomberg US Aggregate Index rose 0.26% for the week, while high-yield bonds gained 0.05%.
• Performance was positive across the quality and duration spectrum, especially on the longer end of the curve.
• Long-term corporate bonds were the best-performing segment, returning 0.69%.
• Investment-grade and high-yield corporate yields ended the week at 5.10% and 7.26%, respectively.

Macroeconomic Data

• U.S. economic data for the week was light and did its best to draw little attention away from the surging AI optimism.
• U.S. factory orders in March rose 1.5%, well ahead of estimates and last month’s 0.3% gain, as new orders for goods rose for the fourth month out of the last five.
• The April ISM services index fell to 53.6 from 54.0, a slight dip as businesses still grew amid a more cautious backdrop.
• The ADP employment report showed the U.S. created 109,000 new jobs in April, well ahead of estimates and marking the biggest increase in 15 months.
• Nonfarm payrolls added 115,000 new jobs in April, topping consensus estimates and capping the strongest two-month period for nonfarm payroll increases since 2024.
• The unemployment rate remained at 4.3%; however, average hourly earnings growth was weaker than expected, the labor force participation rate dipped, and the U-6 unemployment rate (which accounts for unemployed and underemployed workers) increased.
• The University of Michigan’s preliminary consumer sentiment index fell to 48.2 in May — its lowest reading on record — as higher gasoline prices and tariffs weighed on responses.

(as of Monday’s Market Opening)

Global Client Survey

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Disclosures

1. Wealth Mechanics™ is a registered trademark of Cestia Wealth Management. Unauthorized use of the trademark, including but not limited to commercial use, reproduction, or imitation without explicit written permission from Cestia Wealth Management, is strictly prohibited.
2. Market commentary provided by NewEdge Advisors
3. Charts concerning market data are provided by Exhibit A.
4. Guides and other downloadable firm material respective to financial planning processes and data are provided and powered by fpPathfinder.
5. Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. Securities offered through NewEdge Securities, LLC. Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC.
6. Cestia Wealth Management is not a legal tax professional. We offer tax gap analysis for clients who desire to have a comprehensive financial plan, which requires in-depth tax strategy and planning as a distinct part of the overall customized solution. Please consult your tax professional on all matters addressed in this report.
7. Information about annuities are not to be considered a recommendation. The information provided should not considered a recommendation to purchase or sell any particular security.
8. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.

The post Week Ending May 8, 2026 appeared first on Cestia Wealth Management.

Extreme pessimism often preceded double-digit returns for equities

When consumer confidence sinks, markets typically price in lower return potential as investors anticipate that consumers will cut back on spending, which accounts for roughly 70% of U.S. GDP. The Iran war has pushed consumer sentiment in April 2026 to its lowest in history. However, market timing moves can backfire. Some of the strongest returns have occurred after consumer sentiment bottomed. Looking back at major sentiment lows — including the inflation shock of the 1980s, Covid-19 pandemic and the Federal Reserve’s rapid interest rate hikes in 2022 — returns one year later averaged 28.5%.

Sudden Wealth Event Issues

Clients can experience a variety of wealth events that lead to a financial windfall, including the sale of a business or real estate, an inheritance, lottery winnings, or a legal settlement. An increase in wealth, especially when unexpected, large, and/or sudden, requires thoughtful planning. This is a critical time to provide guidance and value to your clients, and offers a unique opportunity to make a significant positive impact.

This checklist helps guide your conversations when advising clients that experience a sudden wealth event, and covers:

• The nature, timing, and terms of the wealth event
• Cash flow impact
• Liquidity considerations
• Tax planning matters
• Long-term planning opportunities

Download Our Guide

Equities

• U.S. equity markets advanced modestly for a second consecutive week, supported by a strong corporate earnings season.
• The S&P 500 and NASDAQ each gained approximately 1%, with both benchmarks closing at new record highs; the S&P 500 surpassed 7,200 for the first time.
• With more than half of S&P 500 constituents reporting, first-quarter earnings growth is on pace to exceed 14% — a sixth consecutive quarter of double-digit growth.
• Strength has been driven by a combination of robust revenue gains and historically high profit margins.
• In a reversal from recent trends, large-cap value outperformed large-cap growth, led largely by strength in the energy sector.
• Sector performance was broad-based, led by Communication Services and Energy; Materials was the primary laggard.
• Energy leadership reflected continued gains in oil prices, with Brent crude touching $126 per barrel intraday on Thursday.
• International results were mixed: developed foreign markets advanced for the week, while emerging markets declined.

Bonds

• Bond prices declined as yields rose across the curve, with rising oil prices and a resilient labor market tempering expectations for rate cuts later this year.
• The 10-year Treasury yield closed the week at 4.39%; the 2-year finished at 3.88%, leaving the 2s–10s spread at 51 basis points.
• The Bloomberg U.S. Aggregate Index returned -0.39% for the week, while high-yield bonds returned 0.05%.
• Corporate performance was generally negative, with weakness most pronounced at the longer end of the curve as yields adjusted higher.
• Short-term government and corporate bonds returned -0.19%, while long-term Treasuries returned -0.85%.
• Investment-grade corporate yields ended the week at 5.14%; high-yield corporate yields finished at 7.24%.

Macroeconomic Data

• The data calendar offered a mixed read on the U.S. economy.
• Consumer confidence rose to 92.8 in April, a four-month high, as a stronger labor market outlook and rising equity prices offset concerns over higher gasoline prices and Middle East tensions.
• The FOMC held the federal funds rate steady at 3.50%–3.75% for a third consecutive meeting; four members dissented — three opposing the use of easing language and one in favor of an immediate rate cut.
• First-quarter U.S. real GDP grew at an annualized rate of 2.0%, modestly below expectations, with growth concentrated in AI-related investment and government spending.
• Headline PCE rose to 3.5% year-over-year in March — its highest level since August 2023 — and increased 0.7% month-over-month.
• Core PCE rose 3.2% in March, the fastest pace since November 2023.
• Personal income increased 0.6% in March, while personal spending rose 0.9%.
• The ISM Manufacturing Index held at a four-year high of 52.7% in April, marking a fourth consecutive month of expansion.

(as of Monday’s Market Opening)

Global Client Survey

We’re inviting you to take part in a quick, anonymous client survey. Your feedback helps us fine-tune our process, elevate your experience, and ensure we’re delivering what matters most to you. This isn’t just about checking a box—it’s about shaping the future of how we serve you. Your voice helps guide our next steps. We’re listening. We’re learning. And we’re grateful for your trust.

Take Our Survey Now (click here)

Disclosures

1. Wealth Mechanics™ is a registered trademark of Cestia Wealth Management. Unauthorized use of the trademark, including but not limited to commercial use, reproduction, or imitation without explicit written permission from Cestia Wealth Management, is strictly prohibited.
2. Market commentary provided by NewEdge Advisors
3. Charts concerning market data are provided by Exhibit A.
4. Guides and other downloadable firm material respective to financial planning processes and data are provided and powered by fpPathfinder.
5. Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. Securities offered through NewEdge Securities, LLC. Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC.
6. Cestia Wealth Management is not a legal tax professional. We offer tax gap analysis for clients who desire to have a comprehensive financial plan, which requires in-depth tax strategy and planning as a distinct part of the overall customized solution. Please consult your tax professional on all matters addressed in this report.
7. Information about annuities are not to be considered a recommendation. The information provided should not considered a recommendation to purchase or sell any particular security.
8. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.

The post Week Ending May 1, 2026 appeared first on Cestia Wealth Management.

What Drives Stock Returns? Follow the Earnings.

Markets can be noisy — but the data tells a clear story. Since 2000, stock returns and earnings growth have moved largely in tandem, and the past year is no exception. The S&P 500 delivered a total return of 31.3%, while 12-month forward earnings estimates grew by 22.7%.

Short-term volatility will always be part of the picture, driven by sentiment and headlines. But over time, one thing consistently moves markets: earnings growth. It’s the engine, and the numbers continue to prove it.

5 Questions with Fidelity: Bond strategies for today’s market

Learn how different bond strategies may help support stability, income, tax efficiency, and more in the latest video from Fidelity. Click to watch.

Key Takeaways

Equities

• U.S. markets edged higher, with the S&P 500 and Nasdaq closing the week at record levels
• Q1 earnings season is off to a strong start — 84% of reporting S&P 500 companies beat EPS estimates, with blended earnings growth at 15.1%
• If that pace holds, it would mark six straight quarters of double-digit earnings growth
• Growth outpaced Value for the week; Energy and Tech led sectors, while Health Care and Financials lagged
• International results were mixed — Emerging Markets gained while developed foreign markets declined

Bonds

• Bond prices fell as yields rose across the curve; the 10-year Treasury ended the week at 4.31%, the 2-year at 3.78%
• The 2–10 year spread widened to 53 basis points
• The Bloomberg US Aggregate Index declined 0.26%; high-yield bonds slipped 0.19%
• Corporate bonds also pulled back, with short-term down 0.11% and long-term down 0.45%

Macroeconomic Data

• Retail sales surged 1.7% in March — the strongest reading since early 2023 — with underlying demand remaining solid ex-gas
• Jobless claims ticked up slightly but remain at historically healthy levels
• Manufacturing activity hit a near four-year high, with the S&P Global PMI rising to 54.0 in April
• Consumer sentiment softened to 49.8, while inflation expectations climbed — a reminder that uncertainty lingers beneath the resilient spending data

(as of Monday’s Market Opening)

Global Client Survey

We’re inviting you to take part in a quick, anonymous client survey. Your feedback helps us fine-tune our process, elevate your experience, and ensure we’re delivering what matters most to you. This isn’t just about checking a box—it’s about shaping the future of how we serve you. Your voice helps guide our next steps. We’re listening. We’re learning. And we’re grateful for your trust.

Take Our Survey Now (click here)

Disclosures

1. Wealth Mechanics™ is a registered trademark of Cestia Wealth Management. Unauthorized use of the trademark, including but not limited to commercial use, reproduction, or imitation without explicit written permission from Cestia Wealth Management, is strictly prohibited.
2. Market commentary provided by NewEdge Advisors
3. Charts concerning market data are provided by Exhibit A.
4. Guides and other downloadable firm material respective to financial planning processes and data are provided and powered by fpPathfinder.
5. Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. Securities offered through NewEdge Securities, LLC. Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC.
6. Cestia Wealth Management is not a legal tax professional. We offer tax gap analysis for clients who desire to have a comprehensive financial plan, which requires in-depth tax strategy and planning as a distinct part of the overall customized solution. Please consult your tax professional on all matters addressed in this report.
7. Information about annuities are not to be considered a recommendation. The information provided should not considered a recommendation to purchase or sell any particular security.
8. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.

The post Week Ending April 24, 2026 appeared first on Cestia Wealth Management.

The Biggest Build-Out in History

The numbers behind the AI revolution are staggering. America’s largest tech companies have committed $650 billion in capital expenditures for 2026 alone — roughly 2% of U.S. GDP — to build out the infrastructure powering artificial intelligence.

That spending is already creating winners beyond Silicon Valley. Companies supplying the picks and shovels of this buildout — think Caterpillar, Carrier, and Nvidia — are seeing demand that few could have anticipated just a few years ago.

To put the scale in perspective: this investment dwarfs the Manhattan Project, the Apollo program, and even the internet buildout. Each of those moments in history didn’t just produce a single breakthrough — they spawned entirely new industries and reshaped the economy for decades.

The AI buildout may well do the same.

SOURCE: Capital Group

Your tax return is more than a filing — it’s a planning roadmap.

At Cestia Wealth Management, we believe a proactive tax return review is one of the highest-value conversations we can have with clients each year. Here’s what we look at — and why it matters for your financial picture.

• Filing status. Married filing jointly is the default — but it isn’t always optimal. Separation, prior-year divorce, or widowhood can each open alternative strategies worth evaluating.
• Dependent & family credits. Dependent children may unlock meaningful credits. We review eligibility and ensure nothing has been left on the table due to life changes in the prior year.
• Investment income reporting. Dividends, capital gains, and sales of securities each carry their own reporting requirements. We verify accuracy and look for tax-loss harvesting opportunities going forward.
• Tax-advantaged accounts. IRA conversions, HSA contributions, and 401(k) activity all flow through the return. A Roth conversion that wasn’t tracked properly can create an unexpected tax bill.
• Rental real estate. Rental income, depreciation schedules, and passive loss rules require careful attention. Missed deductions and misclassified income are among the most common errors we encounter.
• State-specific considerations. State tax rules vary widely and don’t always mirror federal treatment. Multi-state income, residency changes, and local deductions can all affect your overall liability.

A tax return review isn’t about catching errors after the fact — it’s about understanding where you stand and positioning you better for the year ahead. Whether you’re a new client or a longtime one, this conversation is a cornerstone of proactive wealth management at Cestia. Reach out to your advisor to schedule your review.

Download Our Checklist

Equities

• S&P 500 +4.55%; Russell 2000 outperformed at +5.57%
• Earnings season strong out of the gate — 88% of reporters beat EPS estimates; blended Q1 2026 growth rate at 13.2%, potentially the sixth straight quarter of double-digit gains
• Growth over value: Large Cap Growth +6.72% vs. Large Cap Value +2.41%
• Leading sectors: Info Technology (+8.09%), Consumer Discretionary (+6.64%), Communication Services (+6.28%)
• Energy the lone detractor (-3.50%) as WTI crude slipped
• International markets participated: MSCI EM +3.23%, MSCI EAFE +2.20%

Fixed Income

• Yields fell across the curve; 10-year Treasury closed at 4.26%, 2-year at 3.71% (55 bps spread)
• Bloomberg US Aggregate +0.55%; High Yield +0.66%
• Corporate bonds positive across durations: Short-term +0.40%, Long-term +0.98%
• Credit spreads tightened to historically tight levels; IG and HY yields at 4.98% and 7.14%

Macro Backdrop

• Data light, but Q1 bank earnings well-received — management flagged steady consumer spending and a stable outlook
• Wholesale inflation encouraging: headline PPI +0.5% (below expectations), core PPI cooled to +0.1% MoM; YoY still elevated at 3.8%
• Jobless claims fell to 207K; continuing claims ticked up to 1.818M
• Industrial production declined 0.5% in March; broad softness in mining, utilities, and manufacturing
• Regional manufacturing showed an April pickup in new orders — a potential positive offset
• Housing remains a drag: existing home sales and builder sentiment both weak on affordability concerns

(as of Monday’s Market Opening)

Global Client Survey

We’re inviting you to take part in a quick, anonymous client survey. Your feedback helps us fine-tune our process, elevate your experience, and ensure we’re delivering what matters most to you. This isn’t just about checking a box—it’s about shaping the future of how we serve you. Your voice helps guide our next steps. We’re listening. We’re learning. And we’re grateful for your trust.

Take Our Survey Now (click here)

Disclosures

1. Wealth Mechanics™ is a registered trademark of Cestia Wealth Management. Unauthorized use of the trademark, including but not limited to commercial use, reproduction, or imitation without explicit written permission from Cestia Wealth Management, is strictly prohibited.
2. Market commentary provided by NewEdge Advisors
3. Charts concerning market data are provided by Exhibit A.
4. Guides and other downloadable firm material respective to financial planning processes and data are provided and powered by fpPathfinder.
5. Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. Securities offered through NewEdge Securities, LLC. Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC.
6. Cestia Wealth Management is not a legal tax professional. We offer tax gap analysis for clients who desire to have a comprehensive financial plan, which requires in-depth tax strategy and planning as a distinct part of the overall customized solution. Please consult your tax professional on all matters addressed in this report.
7. Information about annuities are not to be considered a recommendation. The information provided should not considered a recommendation to purchase or sell any particular security.
8. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.

The post Week Ending April 17, 2026 appeared first on Cestia Wealth Management.

Thematic Spotlight: Oil Prices Are Falling — Here’s Why That’s Not the Whole Story

Crude oil has been volatile lately, and when energy prices move, it’s natural to wonder what that means for consumers and the broader economy. A longer-term look at the data offers some useful perspective.

Energy’s share of total consumer spending — covering gasoline, fuel oil, natural gas, and electricity — currently sits at just 3.61%, well below the three-year average of 3.82% and a fraction of the nearly 10% peak reached in the early 1980s. In other words, today’s consumers are spending roughly a third of what their predecessors once did on energy as a share of their overall budget.

The implication for investors is meaningful: oil price swings, while attention-grabbing, carry less weight in the consumer economy than they once did. A spike at the pump still stings, but it no longer moves the needle on total household spending the way it did a generation ago. Conversely, a sharp drop in oil prices — like what we’ve seen recently — provides a more modest tailwind than headlines might suggest.

The structural story here is one of gradual efficiency gains, fuel diversification, and a services-driven economy that is simply less energy-intensive than it used to be. That’s worth remembering the next time oil dominates the financial news cycle.

Why Taxable Custodial Accounts Beat “Trump Accounts” for Kids’ Savings

What Are Trump Accounts?

The OBBBA, signed into law on July 4, 2025, created a new type of savings account dubbed the “Trump Account” (TA), which can be opened and funded beginning July 4, 2026. The IRS released initial guidance in late 2025 via Notice 2025-68, with formal regulations still pending.

Key mechanics:

• Contributions are limited to $5,000/year per child (after-tax by individuals), with employers able to contribute up to $2,500 (pre-tax). Government and 501(c)(3) organizations can contribute outside the annual cap.
• A pilot program seeds $1,000 into accounts for every U.S. citizen born between 2025–2028, but parents must opt in by filing Form 4547 — it is not automatic.
• Investments are restricted to low-cost index mutual funds or ETFs with a 0.10% expense cap and no leverage. Fidelity
• No withdrawals are permitted before age 18; after that, traditional IRA rules apply, including the age 59½ penalty-free threshold.
• Because employer/government contributions are pre-tax while individual contributions are after-tax, withdrawals will be a mix of taxable and tax-free dollars — similar to a traditional IRA with mixed basis.

Kitces’ Core Argument: Custodial Accounts Win

The article’s central thesis is that regular taxable custodial accounts (UGMA/UTMA) are generally more advantageous than Trump Accounts for most families, once you account for the kiddie tax, flexibility, and conversion complexity. Here’s why:

1. The Tax Benefit Is Smaller Than It Appears: Trump Accounts offer tax-deferred growth, but most of that benefit already exists in custodial accounts because of how the kiddie tax works. For 2025, the first $1,350 of a child’s unearned income is covered by the standard deduction and remains tax-free. Income between $1,351 and $2,700 is taxed at the child’s marginal rate. Only amounts exceeding $2,700 trigger the kiddie tax at the parent’s marginal rate. Ourtaxpartner For modest account balances, most investment income in a custodial account already escapes meaningful taxation — without the restrictions of a Trump Account.
2. Flexibility Is a Major Advantage of Custodial Accounts: Assets in taxable or custodial structures can be deployed whenever the need arises — college, a car, starting a business, anything. Trump Accounts lock funds up until age 18, then impose IRA rules (59½ for penalty-free access). That’s a decades-long illiquidity trade-off for a tax benefit that may be marginal.
3. The Roth Conversion Play Is Complicated by the Kiddie Tax: A commonly cited strategy for Trump Accounts is converting to a Roth IRA at age 18 when the child’s income is low. Once the account becomes a traditional IRA at age 18, one potential strategy is to convert some or all the balance to a Roth IRA during years when the beneficiary’s income is relatively low. If done in a low bracket, the conversion tax could be minimal, and the funds would then grow tax-free for life. However, the kiddie tax creates a significant complication: Income for minors and dependent students may be taxed at their parents’ marginal rate under the kiddie tax, which limits conversion flexibility before the child is fully tax-independent. The kiddie tax applies through age 18 (or age 23 for full-time students supported by parents), meaning the “convert at a low rate” window may be much narrower than it appears.
4. Unresolved Gift Tax Ambiguity: The American College of Trust and Estate Counsel (ACTEC) submitted formal comments to the IRS expressing concern that the statute creating Trump Accounts does not clearly state that contributions qualify for the annual gift tax exclusion. Without clarification, contributions could technically be treated as gifts of a future interest rather than a present interest — requiring a gift tax return, adding administrative complexity that does not exist with other planning tools.

The $1,000 Seed: Take It, But Weigh the Rest

The article acknowledges the free $1,000 government seed is worth claiming for eligible children (born 2025–2028), but cautions against letting that headline number drive broader contribution decisions. The restrictions that come with the account may not be worth it beyond capturing that initial subsidy.

Planning Takeaways for Your Practice

Bottom line from Kitces: For most clients, the custodial account’s flexibility advantage outweighs the Trump Account’s deferred growth benefit — especially given how the kiddie tax already shelters a meaningful portion of custodial account income at low rates. The $1,000 seed is worth capturing, but funding Trump Accounts beyond that deserves careful analysis before recommending it over existing vehicles.

SOURCE: kitties.com

Equities

• The S&P 500 gained 3.58% on the week, while the Russell 2000 outperformed with a 3.99% gain, as markets rallied following a U.S.-Iran ceasefire agreement
• AI and semiconductor enthusiasm provided an additional tailwind for the technology sector and broader growth stocks; Large Cap Growth rose 3.79% vs. 2.94% for Large Cap Value
• S&P 500 Q1 2026 earnings growth is projected at 12.6%, which would mark the sixth consecutive quarter of double-digit gains
• Communication Services (+5.89%) and Consumer Discretionary (+5.81%) led sector performance; Energy (-4.07%) was the lone detractor as oil fell to $96.57/barrel on ceasefire news
• International markets joined the rally, with Emerging Markets surging over 7% on the de-escalation trade

Bonds

• Bond prices rose broadly as yields declined across the curve; the 10-year Treasury finished the week at 4.31% and the 2-year dipped 3 basis points to 3.81%, narrowing the 2–10 spread to 50 basis points
• High-yield bonds were the top-performing segment as risk appetite improved and credit spreads tightened; investment-grade and high-yield corporate yields fell to 5.07% and 7.30%, respectively

Macroeconomic Data

• Headline CPI jumped to 3.3% in March 2026 — its highest since mid-2024 — driven largely by energy costs; core CPI held steadier at 2.6%, and core PCE edged down to 3.0% in February
• Consumer finances showed strain as disposable personal income rose just 0.1% in February against a 0.5% spending increase, pointing to a drawdown in savings
• The University of Michigan Consumer Sentiment Index fell to a record low of 47.6 in April, reflecting mounting concern over prices and geopolitical uncertainty
• Durable goods orders came in flat and missed expectations; Q4 2025 GDP was revised down to 0.5%, raising questions about the durability of business investment

(as of Monday’s Market Opening)

Global Client Survey

We’re inviting you to take part in a quick, anonymous client survey. Your feedback helps us fine-tune our process, elevate your experience, and ensure we’re delivering what matters most to you. This isn’t just about checking a box—it’s about shaping the future of how we serve you. Your voice helps guide our next steps. We’re listening. We’re learning. And we’re grateful for your trust.

Take Our Survey Now (click here)

Disclosures

1. Wealth Mechanics™ is a registered trademark of Cestia Wealth Management. Unauthorized use of the trademark, including but not limited to commercial use, reproduction, or imitation without explicit written permission from Cestia Wealth Management, is strictly prohibited.
2. Market commentary provided by NewEdge Advisors
3. Charts concerning market data are provided by Exhibit A.
4. Guides and other downloadable firm material respective to financial planning processes and data are provided and powered by fpPathfinder.
5. Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. Securities offered through NewEdge Securities, LLC. Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC.
6. Cestia Wealth Management is not a legal tax professional. We offer tax gap analysis for clients who desire to have a comprehensive financial plan, which requires in-depth tax strategy and planning as a distinct part of the overall customized solution. Please consult your tax professional on all matters addressed in this report.
7. Information about annuities are not to be considered a recommendation. The information provided should not considered a recommendation to purchase or sell any particular security.
8. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.

The post Week Ending April 10, 2026 appeared first on Cestia Wealth Management.