Austin Wealth Management

If you're like many parents who have diligently saved for your child’s education using a 529 plan, you might be wondering what happens to any leftover funds after the tuition bills are paid.

The good news: thanks to Congress and the SECURE 2.0 Act, unused 529 funds can now be rolled over into a Roth IRA for your beneficiary! 🎓➡️💼

Here are a few key rules to keep in mind:

✅ The 529 account must be open for at least 15 years.

✅ The Roth IRA must be in the name of the 529 beneficiary.

✅ Rollovers are subject to annual and lifetime limits, so planning is key.

Though it’s a great new option, navigating the rules can be tricky because there are also income requirements and annual rollover limits. But over the long term, this recent change represents a significant opportunity to enhance both education and retirement savings strategies for your adult children.

Read more tips in our blog by David Lowe, CFP® and reach out to our team for advice on making the most of this opportunity. ⬇️

Transferring Funds from a 529 to a Roth IRA A 529 account can be a great tool for saving for college. Investment growth is tax-free, and so are the withdrawals (if used for qualifying education expenses).

🎙️ New Podcast Episode Alert! 🎙️

can be one of the most complicated parts of financial planning, especially when a big bonus, company stock vesting, or a profitable business year leaves you facing an unexpected tax bill.

In our latest podcast, we sit down with Joe Pachuca, CPA to talk about how proactive can help you avoid those unwelcome surprises from the IRS. Joe shared his insights about:

💼 Common reasons clients may face large tax bills

📅 The importance of proactive tax planning

💡 How estimated taxes work and when they’re due

💰 Deciding between paying taxes immediately or reserving funds in a high-yield savings account; and

🧮 How CPAs and qualified tax preparers help you calculate and anticipate estimated taxes.

https://austinwealthmgmt.com/podcast/ep-38-avoiding-surprise-tax-bills-august-2024/

Listen on Apple Podcasts, Spotify, or your favorite podcast player! Search for the Can't Take It With You podcast, and add it to your favorites.🎧

Ep. 38: Avoiding Surprise Tax Bills – August 2024 It's great to earn a big bonus, receive a vesting of company stock, or achieve a profitable business year. Unfortunately, without good tax planning, extra incom

📈 Using Dollar-Cost Averaging to Reduce Risk 📉

▶ Client: "I am sitting on this pile of cash in my account but I don't know the best time to put it into the market." 💰 😕 ⁉

Whether from the sale of a home or business, vested stock, an inheritance, or just disciplined savings, deciding how to move a lump sum of cash into the market can be daunting due to fluctuations -- but also behavioral psychology.

Enter dollar-cost averaging (DCA), a strategy that we use to help manage risk by spreading over time.

Here are some key benefits:

✴ Reduce timing risk: DCA spreads investments to avoid the risk of investing a lump sum right before a downturn. You invest a fixed amount at regular intervals, continuously adding to your portfolio.

✴ Take advantage of unpredictable market dips: Pre-scheduled investments mean buying more shares when prices drop periodically, boosting potential returns. We also use a "trigger schedule" to move additional cash into investment accounts during market declines to capitalize on lower prices.

✴ Encourage consistent investing: DCA offers a structured approach, eliminating the pressure of market timing and removing emotional biases that may discourage "getting into" the market.

For more about how we choose the right DCA model for clients and their situation, read our latest from Kevin X. Smith, CFA:

https://austinwealthmgmt.com/using-dollar-cost-averaging-to-reduce-risk/

Using Dollar-Cost Averaging to Reduce Risk Investing a large sum of money can be daunting, especially with the uncertainty of market fluctuations. Enter dollar-cost averaging (DCA), a strategy designed t

TFW when it's a perfect night on the Forty Acres and the Texas Exes names you one of the fastest-growing Longhorn businesses in the world, as part of the 2024 ! 🙌⭐️

This prestigious list identifies and celebrates the fastest-growing businesses founded, owned, or led by alumni of The University of Texas at Austin.🤘🏼

We're especially honored that Austin Wealth Management is the only financial planning and advising firm selected for the this year. This is a testament to our fantastic, talented team -- and our equally amazing client family.

For more information on the Longhorn 100 and to view the complete 2024 rankings, visit https://www.texasexes.org/longhorn100/2024

🚀 T-Bill & Chill? A Nostalgic Journey & Today's Reality 🚀

Let's time travel back to 1981! 🔙 Imagine investing $2M in a 30-year Treasury Bond with a 15% yield: that's $300,000 annually with minimal risk. This was the epitome of sitting back and 'living off the interest'.

But, fast forward to 2023, and things look different, according to AWM partner Kevin X. Smith, CFA. Read our latest blog by to find out how:

https://austinwealthmgmt.com/t-bill-chill/

📉 Today's T-Bills? Not as chill. With 5% yields, it doesn't quite match the golden days of 15%.

While safe, it's not enough for most investors' long-term goals, especially with inflation in play. Our 1981 selves wouldn't recognize this change; they were busy adjusting TV antennas pre-Netflix era!

🧮 The Math Behind Today's T-Bills:

▶ Real Return: It's all about the nominal return minus inflation. A 5% T-Bill with 5% inflation? That's a zero real return. You're not getting ahead, just maintaining.

▶For retirees: Your T-Bill interest rate needs to beat inflation for sustainability beyond 20 years.

▶Accumulators: Reinvesting interest helps, but inflation still erodes purchasing power.

💡 Alternatives? TIPS (Inflation Protected Securities) offer a real return of almost 2.5%, even with high inflation. Corporate bonds might yield 7-10%, adjusting for credit risk. But these options come with their own risks.

🤔 The Bottom Line: Few can truly "T-Bill & Chill" like in 1981. Higher potential real returns often require embracing riskier assets like stocks and real estate.

T-Bill & Chill Hop in the time machine with me. You could have bought a 30 year Treasury Bond in 1981 yielding 15% annual income! That income was backed by the taxing authorit