August 2024 Newsletter

The only thing hotter than these August summer days is this month’s Dyer & Co. newsletter edition! This month, we bring you different topics and insights to help you as we head into the back half of 2024.

529 Plans: Saving for the Future

Building off our conversation last month around saving for higher education, we want to dive deeper into saving plans for and your family. Planning for your a family member's future education can be daunting, but there are effective strategies to ease the financial burden. Specific savings plans can help you prepare for rising tuition costs and ensure your student has the resources they need for their academic journey. 

Starting Early with Savings Plans:

Time is your biggest variable. Starting early can help manage the higher costs of a college degree. We’re sure you’ve heard of savings plans like state-sponsored 529 college savings plans. They are a great tool for saving for education costs. Essentially, it is a tax-advantaged savings plan specifically designed for education expenses. Earnings grow tax-free and withdrawals for qualified education costs are also tax-free. Funds put into this investment plan can be used for tuition, fees, room and board, and many other miscellaneous expenses that we mentioned last month at most accredited colleges and universities.

Again, think carefully about your timeline. A toddler has quite a few years to enjoy stock market growth. A high schooler does not. It's critical to adjust the portfolio as graduation looms. You don't want to see a market crash destroy your savings.

By the way, you may have also heard of Coverdell ESAs. They are extraordinarily unpopular because their annual contribution limits are quite low ($2,000 in 2024), making it harder to accumulate sufficient savings for higher education expenses compared to the much more popular 529 plan.

Maximizing Your 529 Plan:

529 plans have long been a powerful tool for college savings due to their many benefits. The Secure 2.0 Act of 2022 adds a new feature: the ability to roll over unused 529 funds into a Roth IRA, offering a way to avoid taxes and penalties on overfunded accounts. This option has conditions, like a 15-year account maintenance period (meaning newer 529 accounts do not qualify) and a $35,000 lifetime rollover cap per beneficiary. But what a great tool to create a solid foundation of retirement savings for recent grads! While federal tax treatment is clear, state tax implications can vary, so it's important to understand your state's rules. The traditional benefits of 529 plans remain, allowing tax-free use of funds for educational expenses, including higher education, K-12 tuition, and student loan repayments.

Impact on Financial Aid:

It’s important to understand how a 529 plan affects financial aid and how it’s treated on the “Free Application for Federal Student Aid” (FAFSA). First of all, every 529 plan has an account owner and an account beneficiary (the student-to-be). If the parent who files the FAFSA is the account owner of a 529 plan, it is considered parental assets, which can reduce your eligibility for need-based aid. However, assets held in the 529 accounts owned by a grandparent or anyone else besides a dependent student or one of their parents will have no effect on the student’s FAFSA and are not counted as an asset on the application.

As you can see, there are many nuances of the 529 college savings plan. We want to make sure that you understand what they allow you to do and help you understand as you start to save. The college process is an exciting, yet stressful, experience and we want to make sure that how you pay for your child’s education is the least of your worries. Please feel free to reach out and contact us with any questions you may have about the 529 savings plan and saving for the future!

Identity theft never bothered me anyway!

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Financially Preparing for the 2024 Election?

As the 2024 election approaches, you might be curious how political shifts and economic policies might impact your financial life.

Industries in the Running:

Investors are keenly aware of the potential impact the outcome could have on various sectors of the economy. With significant divergence between policy directions for both candidates, it is crucial to understand which industries may benefit under each administration



• Trump: several industries may grow due to his policy preferences and economic strategies. Energy, particularly fossil fuels, could see a resurgence with deregulation, while defense and aerospace might benefit from increased military spending. Additionally, construction, infrastructure, and financial services may thrive due to reduced regulatory constraints and a more business-friendly environment.
• Harris: areas like renewable energy, healthcare, and infrastructure may benefit from his continued focus on certain policies. Sectors such as solar, wind, electric vehicles, healthcare, biotechnology, and technology could see significant growth due to ongoing support for clean energy, public health, and modernization efforts.

Historical Impact on the Stock Market:

While you may wish to stay informed about the 2024 election, making sector-specific investment “bets” based on the uncertain outcome is risky. Historical data suggests that election results have minimal impact on medium to long-term market performance, with economic results and inflation trends being more influential. Key policy issues to watch include tax policies, spending priorities, healthcare reform, regulation, immigration policy, trade relations, and geopolitical conflicts. Different market sectors may be affected by proposed policies depending on which party wins. Additionally, a delay in verifying election results, especially in a closely contested race, could lead to short-term market uncertainty. Current polls indicate a tight race between Harris and Trump, with battleground states playing a crucial role. In a race this close, tilting your portfolio toward one set of policies over the other comes down to a coin toss, which is not a sound investment strategy.

Much Ado:

Each candidate would like you to think that the other will wreck your nest egg. In reality the US economy is likely to find ways to be successful regardless of who inhabits the White House. Tax and economic policies that evolve under the next administration will have a far bigger impact on the decisions we make together.

For example the trillions of dollars worth of tax breaks created in 2017 by the Tax Cuts and Jobs Act (TCJA) expires in 2025. Any extensions or new policies will need congressional approval. That's to say your next senator or congressperson may have more influence on your finances than your next president. Both Republicans and Democrats have shown a very high willingness to make short term tax policy decisions at the expense of the national deficit.

Stay tuned. We'll be sure to discuss any changes that affect financial planning strategies. This is where we'll find the greatest financial impact together. Much of the rest is designed to get you spun up and agitated between now and November.

Dyer & Co. Across the Pond!

• Eli's tenure as Dyer & Co's first intern has come to an end. We are grateful for his help and wish him the best as his studies continue in London and then Italy for the fall semester.
• Meanwhile Gray and family enjoyed a fun trip to Germany, Norway and Sweden in July. They saw old friends, fed a moose, hiked, caught some fish, and enjoyed sunsets and cooler weather.

Sunset at 10:18pm in Trondheim, Norway

We hope you enjoyed the August newsletter! If you have any questions or would like to discuss your financial situation to align with your personal goals, please don’t hesitate to reach out–we’re here to help! Have a great rest of the summer.

Thank you for reading. If you liked this content, please share with a friend. You can always reach us by replying to this email or at 704-323-6872.