The North American Securities Administrators Association (NASAA) wants investors to be aware that fraudulent investment schemes are surging during the COVID-19 crisis.

“In these extraordinary times the health and welfare of all must be our foremost concern, and that includes our financial health. Our primary focus remains on the protection of retail investors,” said Christopher W. Gerold, president of NASAA and chief of the New Jersey Bureau of Securities, in a recent news release.

The global pandemic has increased threats to investors related to COVID-19, including “fraudulent offerings, investment frauds and unregistered regulated activities,” explained Gerold.

“Just as state and provincial securities led the way in protecting investors from fraudulent cryptocurrency-based schemes in 2018, we stand ready to protect investors from COVID-19-related schemes,” said Gerold.

How do you know if you might be susceptible to being taken advantage of by a fraudster?

Over my many years in the financial services industry, first as a lawyer, then as a money manager, I can tell you that being a skeptic is the key characteristic that lowers the possibility of being defrauded.

If you would like to get a sense of your own susceptibility to being scammed, let me tell you about something that can guide you. Developed by NASAA and the Canadian Securities Administrators, there is a 12-question quiz to help individuals avoid becoming victims. The quiz, which was developed a while ago, is still relevant today. You can find it here: surveymonkey.com/r/2020FraudQuiz.

The quiz was designed to test investors’ knowledge of scams and frauds, and also to increase financial literacy.

Some of the questions relate to the person who is making the recommendation.

How would you answer this question? “A fellow book club member tells you about an investment opportunity that has earned returns of 20% during the past year. Your investments have been performing poorly and you’re interested in earning higher returns. This person is your friend and you trust them. What should you do?”

Many people would go along with the friend’s recommendation. Would you?

Here is NASAA’s answer: “You should never make an investment based simply on word-of-mouth, even if the recommendation comes from a family member, friend or acquaintance. Fraudulent schemes are frequently perpetuated this way. The promise of quick, high returns should also alert you to a possible scam. As a general rule, risk and return are proportional; the higher the return, the higher the risk. Even if a company looks and sounds legitimate, you should always check it out. Therefore, ask for more information about the investment and call your securities regulator to see if the investment has been registered or exempted for sale.”

To read more about avoiding fraud, visit NASAA’s Fraud Center at www.nasaa.org/investor-education/fraud-center/.

We’ll discuss ways to identify potential scams and how to protect yourself and your family members from fraud in a future column.

In the meantime, do write to me (readers@juliejason.com) to share any experiences you have had that can help other readers of this column protect themselves.

For a quick video that covers the topics we’ve discussed in today’s column, go to vimeo.com/426345452/425463bfa6.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

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Today, May 29, is National 529 College Savings Plan Day. 529s are named after an Internal Revenue Code section (yes, it’s Section 529), which was adopted in 1996. 529s are intended to help families save for college with the help of tax advantages.

I suggest thinking of 529s as having two phases: the saving phase and the spending phase.

The saving part is relatively easy. There are limits on how much money can be put into a 529 plan, which you can read about here: tinyurl.com/y9jhrsp3.

Most 529 plans are organized by states. You can look up your state’s plan here: tinyurl.com/yb4lsr7u. This list is provided by the College Savings Plan Network (CSPN), which was formed in 1991 as an affiliate to the National Association of State Treasurers.

For example, South Carolina’s plan is called FutureScholar.com. South Carolina residents can claim a tax deduction on their state tax returns for contributions to a South Carolina 529. In fact, the majority of states have similar provisions (for a list, go to tinyurl.com/y8wwrdxg).

However, there are limits on who can claim the tax deduction. Check your state: Is it the owner of the 529 account who can claim the deduction or the person who funded the account?

Earnings are income-tax-free on the state and federal level, but only as long as withdrawals are used for qualified education expenses (QEE).

That brings me to the more difficult aspect of 529 plans: What happens when the student you have been saving for needs the money to pay bills? That’s the QEE part of the equation.

If you use the money for purposes other than QEE expenses, you not only lose tax advantages, but also may need to pay a 10% penalty. There are gift- and estate-tax issues to be considered as well. The bottom line? Study QEEs.

Since Jan. 1, 2018, 529s are not limited to post-secondary costs. QEEs now include up to $10,000 of K-12 tuition.

When it comes to spending 529 funds, there are specific rules and regulations related to it. You can find information here: tinyurl.com/y9rgtcfk.

The upshot is that 529s can be very valuable in the right circumstances, but they take some effort to understand before leaping forward. My recommendation: Set aside some time to do your research.

Here is a list of resources: An independent firm called savingforcollege.com has an easy-to-use website. Begin with “What is a 529 plan?” which you will find under “College Savings 101.”

You’ll want to visit the regulators’ websites as well:

Financial Industry Regulatory Authority (FINRA) website (tinyurl.com/ydye9wm5)

Internal Revenue Service’s Publication 970 (Tax Benefits for Higher Education) (tinyurl.com/lnmb4q4)

The Municipal Securities Rulemaking Board’s education center website (tinyurl.com/ydxugjvj)

The Securities and Exchange Commission (tinyurl.com/yd8zqejy)

It helps to have a “529 Day” place an emphasis on saving for education. A related topic is student loans; send me an email (readers@juliejason.com) if you have any interest in that topic.

Finally, there should be a “How to Go to College for Free” Day. This happens to be the title of another resource that is worth reading at: https://www.savingforcollege.com/article/how-to-go-to-college-for-free.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

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If you are a business owner who received a Paycheck Protection Program (PPP) loan, no doubt, you’ll want to get the loan forgiven. After all, forgiveness is the intent behind the legislation that made PPPs available in order to help small businesses in a time of great uncertainty due to the coronavirus pandemic.

Millions of businesses have received these loans. The next step is to apply for forgiveness.

The Small Business Administration (SBA) released the application for forgiveness last Friday, May 15.

The application, which is available online or through your PPP lender, is 11 pages long; only three pages need to be filled out (the two-page application and the one-page Schedule A); the remaining pages are instructions and worksheets. You can find the application here: //tinyurl.com/yd9j4lbj. This application is fillable (that is, you can type in your answers online).

Before you tackle the job of completing the application, I recommend studying the instructions carefully, with a special focus on these terms: eligible payroll costs, covered period, alternative payroll covered period and eligible nonpayroll costs.

It will help you to think about how your business fits within those definitions and what documentation you will need to support your answers. Payroll costs will be most important to understand, since “at least 75% of the potential forgiveness amount” has to be used for payroll costs.

There are some nuances that need to be understood. For example, when calculating payroll costs, which is done on a worksheet in the application, individuals earning more than $100,000 are capped at $15,385. That’s the eight-week equivalent of $100,000 per year.

Payroll costs include employer contributions to employee retirement plans, but not pre-tax or after-tax contributions by employees, such as employee elective contributions to 401(k) plans.

They also include the employer’s costs of employee health insurance, but not employees' pre-tax or after-tax health insurance contributions.

Also included are employer taxes assessed on employee compensation, but not taxes withheld from employee earnings.

The application will have to be submitted to the lender with documentation to support the payroll costs entered on the application.

After getting a handle on the types of costs that can support the forgiveness request, be sure you understand timing. The date you received the PPP loan is the start date for calculating the payroll costs during the “covered period,” which is eight weeks long, or 56 calendar days.

As an example provided in the application, assuming you received the PPP loan on April 20, the covered period is from April 20 through June 14.

That timeframe may not fit your regular payroll cycle, which would make sticking to the covered period administratively difficult. The SBA anticipated that issue and provided a solution: an “alternative payroll covered period.”

The alternative, which will probably be used by most businesses, allows you to use the dates of your actual payroll.

Continuing the example with April 20 as the date of receipt of PPP funds, say the first pay period after that is April 26, then the alternative covered period is April 26 through June 20. You’ll find this example in the application.

One more very important point: It’s a crime to knowingly make a false statement on the application, with monetary fines and prison sentences for those who break the law, so take the application process very seriously.

If you need help, there are a number of law firms and accounting firms that are developing expertise with these applications. It may be worth your while to consider engaging their help. You can find these experts online.

I will be writing more on this topic as the SBA issues additional guidance and posting updates on my website, www.juliejason.com.

For a quick video that covers the topics we’ve discussed in today’s column, go to vimeo.com/421629229.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

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