“Matt,” a 65-year-old reader of this column, is about to retire with a substantial 401(k). He has never invested on his own, only through his 401(k). Luckily, his pension and Social Security retirement benefits cover the amount of money he needs to live on to support himself right now.

He wants to know: Where do I turn for expertise if I’m not comfortable with a commissioned salesperson? That question assumes that Matt will roll over his 401(k) to an IRA held at a brokerage firm -- or he may want advice while keeping the 401(k) intact.

Matt is not alone with this dilemma: Any 401(k) participant who has not invested on his own faces the same questions. No matter who Matt retains, there will be an information imbalance between him and the financial professional. (The same holds true for a surviving spouse who was not actively engaged in the financial provider-client relationship during the deceased spouse’s lifetime.)

Should Matt stay with the 401(k)? Since he has been adept at making investment choices for the 401(k), that may be an option. His employer has selected the mutual fund menu for the 401(k) plan, which makes a participant’s job on investment selection much easier than choosing from the universe of investment options.

If he does stay with the 401(k), should Matt change his investment selections in any way? Should he continue making investment choices as he has in the past? Should he change course?

He would need to do so if his pension and Social Security did not cover his lifestyle expenses, but that’s not Matt’s challenge. (Let me know if you have such a situation that you would like to discuss in a future column by emailing me at readers@juliejason.com.)

Another option for Matt is to roll over his 401(k) into an IRA.

If you search online for 401(k) rollovers, you’ll discover a number of options. To find a firm that provides services through salaried personnel, some additional research is necessary.

Since last summer, a new U.S. Securities and Exchange Commission disclosure document makes the search easier. Form CRS provides compensation information. Compensation is a potential conflict of interest.

You’ll look for the answer to this question: “How do your financial professionals make money?”

This is a quote from the CRS of one well-known firm that provides brokerage services: “Our broker-dealer representatives are salaried employees who are not paid commissions for products sold, transactions executed, or the amount of assets serviced.”

Form CRS will help answer other questions as well. For example, does the firm have disciplinary disclosures, how is the firm paid and what are potential conflicts of interest?

You can find a firm’s Form CRS on the SEC website (Investor.gov/crs) by searching for the company’s name.

If you are interviewing firms, compare their Form CRS responses. If you have questions about how to do that, let me know -- a story for another column.

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.

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.

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