In 2016, Congress made permanent the QCD or qualified charitable distribution for people at least 70 1/2 years old who wanted to benefit charities. The charity had to be qualified, and there were other requirements to effect the QCD properly, as set out in IRS Publication 590-B.

The QCD allowed charitably inclined IRA owners to direct all or part of their required minimum distribution (RMD) to the charity (up to $100,000) without triggering an income tax on the withdrawal.

From a tax perspective, that’s a big deal. Unlike RMDs, QCDs are nontaxable IRA withdrawals.

Then came 2019 and 2020.

In December 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law, changing the required starting age for RMDs from 70 1/2 to 72 as of Jan. 1, 2020. (The act did not change the age for QCDs to 72.)

In March 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted. The CARES Act waived RMDs for the year 2020.

How do these two acts affect 2020 QCDs?

Specifically, a reader from Connecticut wants to know: “Before the 2020 RMD requirement was eliminated, my wife and I made some qualified charitable distributions from our IRAs. As we now plan to itemize our 2020 deductions, including charitable contributions, how does the IRS want me to handle the QCD we made?”

Good question, and one that needs to be directed to my reader’s tax preparer. But, let me add that in my research, I found no guidance on this issue from the IRS. (Your tax preparer may have better luck.)

Let’s talk through the logic. There is nothing that I can find that directs any change in how a 2020 QCD is to be handled. That is, if left untouched, the QCD would be treated as any QCD from, say, 2019, for example. If properly set up, the QCD would not be a taxable withdrawal.

The fact that 2020 is a year of RMD waivers should be of no consequence to the QCD.

However, because of the RMD waiver, there is no offsetting tax benefit to be gained. That is, doing a QCD during a year in which an RMD is required eliminates the income tax on the RMD, assuming the two amounts are equal.

For example, if the RMD is $50,000 and the QCD is $50,000, the RMD requirement is met by doing the QCD; there is no income tax due. The RMD would have triggered a tax on $50,000 of income but for the QCD of $50,000.

While the QCD can, according to the IRS, “satisfy” all or part of your RMD, that’s not the governing factor in whether a QCD is valid. The basic requirements for QCDs were established in the Pension Protection Act of 2006 and are located in Section 408 of the Internal Revenue Code (tinyurl.com/y69mwqpg). Additional details on QCDs can be found in IRS Publication 590-B (tinyurl.com/o7rdaz6).

You can search organizations to find if they are eligible to receive tax-deductible charitable contributions here: tinyurl.com/y84b96ja.

On another note, if you are interested in learning investment basics, join me for a virtual presentation, “Research Tools,” on Wednesday, Oct. 14, at 10:00 a.m., sponsored by the Greenwich (Connecticut) Library. To register, go to tinyurl.com/y55jakjq or contact Yang Wang, 203-622-7924, ywang@greenwichlibrary.org.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

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.

It seems there is a special day for just about everything you can think of. As I write this column (Oct. 2), it’s National Name Your Car Day -- and, yes, I’ll admit to naming my first car a long time ago.

But that’s another story.

It happens that Wednesday, Oct. 7, is World Financial Planning Day, sponsored by the Financial Planning Standards Board and the International Organization of Securities Commissions (IOSCO).

Since planning is the bedrock of successful investing, what better time than now to review some planning basics?

Based on years of experience working with families, I would do some homework first. Start with getting a handle on your income and living expenses (your household cash flow) and your assets and liabilities (your household net worth).

Then, do some thinking about what you want your future to look like.

For guidance, I recommend exploring a free resource called Smart Investing, which you can find at tinyurl.com/yxhg6bxm. FINRA, the Financial Industry Regulatory Authority, created the course. FINRA regulates the financial services industry.

Let’s go through some important personal finance concepts, as set out by Smart Investing:

Set your financial goals. You can’t have a plan without establishing goals. FINRA recommends setting time frames first:

1. Identify your most important short-, medium- and long-term financial goals.

2. Estimate how much each of your goals will likely cost.

3. Set up separate savings or investment accounts for each of your major goals.

4. Choose investments suited to meeting each of your goals based on your time frame and your tolerance for risk.

For Step 1, FINRA suggests three time-frame categories: short term (less than three years), midterm (three to 10 years) and long term (more than 10 years). You can read more about that here: tinyurl.com/y54qdftc.

For Step 2, you’ll need some help estimating the cost of future goals, such as college and retirement. FINRA’s calculators at tinyurl.com/y2af7m2e can help.

Step 3 is straightforward. Step 4 will take some studying if you are a new investor. FINRA’s Learn to Invest site (tinyurl.com/rp3uken) is a great starting point, providing interactive modules called Smart Investing Courses that include topics like Setting an Investment Goal, Risk and Return and Diversification.

There are a few other resources that you’ll want to explore. For help with calculating net worth, see FINRA’s sample net worth worksheet at tinyurl.com/y2mfggmb. For calculating cash flow, see FINRA’s sample worksheet for tracking your monthly income and expenses at tinyurl.com/y6cdllvx.

As you can see, planning starts with assessing your current situation, followed by looking into the future. I’m a firm believer in corralling that future into time segments, as FINRA suggests. That makes the planning process much more manageable. The plan has to be in place before even thinking about how to make investment decisions.

Understanding financial basics and creating a solid plan is the foundation for making those decisions. There are many other resources for personal financial planning information. I do favor regulators such as FINRA as resources, as my regular readers know. We’ll explore other financial planning resources in future columns.

In the meantime, do reach out to me with questions and comments at readers@juliejason.com. And, if you have an interest in “talking” about some of these subjects, I invite you to attend a free online class sponsored by the Greenwich Library. You can register for “Investment Basics III: Research Tools,” which will be held Wednesday, Oct. 14, at 10:00 a.m. EDT, at tinyurl.com/y55jakjq, or contact Yang Wang, 203-622-7924, ywang@greenwichlibrary.org.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

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.

What do you think about in September? If you are like me, September brings up memories of going back to high school after a summer of pure bliss. This year, due to the coronavirus, things are a little different.

Take college students, for example, for whom September often signals a return to school. Yet at Harvard, approximately 20% of the freshman class (340 students) deferred attendance this fall. Back in August, a survey released by SimpsonScarborough, a higher education research and marketing company, found that 3 in 4 students were either somewhat or very worried that they might contract COVID-19 if they went to campus for in-person instruction during the fall semester.

Even college football has been affected, with schools like Notre Dame canceling games due to COVID-19 outbreaks.

September also is National College Savings Month, and while many parents are focusing on various ways to save money for their children’s future college education, there are roughly 45 million people who continue to work on paying off their college debt (an estimated $1.6 trillion as of the first quarter of 2019, according to the Federal Reserve Board). COVID-19 has affected their situation as well -- with possibly positive results.

Thanks to the CARES Act, signed into law on March 27, 2020, if you have certain types of college student loans, you have been provided “temporary payment relief.” That relief has since been extended through Dec. 31, 2020.

What do you need to do? The Federal Trade Commission has offered some good advice.

First, see if you qualify. The loans need to be federal student loans, and even then, not all of them are eligible. For example, older Family Federal Education Loans (FFEL) or Perkins Loans that are owned by the school you attended do not qualify.

If in doubt, contact your federal loan servicer (tinyurl.com/y4w8p4dz) online or by phone to find out if your loans are eligible. This is important: relief only applies to your qualifying federal student loan.

Second, if your federal loans do qualify, they have already been placed (by the U.S. Department of Education) into “administrative forbearance.” During this period (through Dec. 31, 2020), you do not need to make payments, and no interest is due.

Third, check to see if you can get a refund if your payments are processing automatically through your bank (starting from March 13, 2020). If so, you may qualify for a refund as part of administrative forbearance. (However, it’s my advice not to do so, since it’s better to lower your student debt, and these payments were “painless” for many people, since they were automatically withdrawn from their bank accounts.)

Fourth, if you are still making payments, you do have the option of stopping them through Dec. 31, 2020, without penalty.

Fifth, if you keep making payments through Dec. 31, the interest rate is now 0%. That’s a big incentive to keep making those payments -- you will pay off your loan faster.

Sixth, if you happen to be on an income-based repayment program and/or a forgiveness program, go to Federal Student Aid's Coronavirus page (tinyurl.com/v8om83u) to find out what options are best for you.

If you would like further advice from the Federal Trade Commission, visit tinyurl.com/y5nnnyaj.

On another note, if you are interested in learning investment basics, join me for a virtual presentation, “Should You Invest on Your Own or With an Adviser?” on Wednesday, Sept. 30, at 10:00 a.m., sponsored by the Greenwich (Connecticut) Library. To register, go to tinyurl.com/yyl569zc or contact Yang Wang, 203-622-7924, ywang@greenwichlibrary.org.

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.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION