The second quarter of 2022 has been challenging, to say the least, for investors as markets responded negatively to shifting interest rates, supply chain snarls, inflationary pressures and geopolitical challenges.

For the quarter, large U.S. companies represented by the S&P 500 Index lost 16.1% and are down 19.9% for the year.  Small companies represented by the Russell 2000 lost 17.2% and are down 23.4% for the year.  Mid cap growth was the worst performing index, down 21%.  International stocks represented by the iShares MSCI EAFE Index lost 14.5% for the quarter, and 19.5% for the year.  The Barclays US Gov/Credit 1-5 year Bond Index was down 1.1% for the quarter, and 4.5% for the year. Value outperformed growth for the second straight quarter.

Inflation was the catalyst for the sharp equity declines and higher yields in the quarter.  On June 10th, the May CPI report showed inflation had not yet peaked as CPI rose 8.6% year-over-year, the highest reading since 1982.  That prompted a violent reversal of the late-May gains, and the selling and market volatility was compounded when the Federal Reserve increased interest rates by 75 basis points on June 15th, the biggest rate hike since 1994. Additionally, Fed Chairman Powell again warned that similar rate hikes are possible in the coming months.

On economic growth, the Chinese economic shutdown has increased global recession concerns, but recently officials in Shanghai declared “victory” against the latest COVID outbreak, and if Chinese economic activity can return to normal, that will be a positive development for global economic growth.

In sum, the factors that pressured stocks in the first quarter, including high inflation, the prospect of sharply higher interest rates, geopolitical unrest, and rising recession fears, also weighed on stocks in the second quarter and until investors get relief from these headwinds, markets will remain volatile.

There is still good news out there.  Unemployment is still low, production seems to be ramping up as pandemic recovery takes place, and supply chain issues seem to be getting a little bit better.


The Senate Finance Committee on June 17th released the Enhancing American Retirement Now (EARN) Act – its counterpart to the House-passed SECURE 2.0 – a massive piece of legislation that includes a number of key provisions supported by the American Retirement Association.

Several of the provisions that are of importance :

  • Enhanced tax credits for the cost of new plans
  • A new stretch match 401(k) safe harbor
  • Allowing higher catch-up limits after age 60
  • Permitting a retirement plan to rely on an employee’s certification that the conditions for a hardship distribution are satisfied
  • Increasing the age for required beginning date for mandatory distributions
  • Reform of family attribution rules
  • Top-heavy relief for excludable employees
  • Hardship distributions for emergencies
  • Providing permanent rules relating to the use of retirement funds in the case of disaster


The US Department of Labor issued final regulations to implement “lifetime income illustrations” which must be provided to defined contribution plan participants pursuant to the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act).  The purpose of this requirement is to help participants understand how their defined contribution plan accounts may translate into an income stream in retirement.  

The lifetime income illustration must assume that payments start as the last day of the applicable statement period.  Similarly, the lifetime income illustration must assume that a participant is age 67 at the time that payments commence (except that if the participant is older than 67, the participant’s actual age must be used).  The benefit must be illustrated as a single life annuity as well as a qualified joint and 100% survivor benefit.

This illustration is required to be provided to all participants in defined contribution plans at least once a year.  The deadline for complying with this regulation in September 18, 2022.