When I speak with investors, whether they invest on their own or with the help of financial professionals, I’m always curious about how they monitor progress. How do they know they are on track? How do they judge performance? Are they happy with the results?

Some tell me they only have time to quickly compare their current brokerage statement balances with earlier balances to get a sense of performance. Being ahead is better than being behind.

That leaves me wondering even more. Is that enough? To give you context, some (not all) financial firms do report performance to their clients in a way that addresses goals and how they are being met on a risk-adjusted basis. That is, they report to clients on a regular basis on progress being made or not made and the risk taken on to achieve that progress.

Before one can do that, goals need to be identified. Very simply: What are your goals, and what’s the path to reaching them?

If you are not making that type of assessment, I challenge you: It may be time to redefine your job as an investor to include a strategic plan that you can use to measure your progress toward one or more specific goals.

In the financial industry, that is achieved through an investment policy statement, or IPS.

Very simply, an IPS is a statement of goals, how you plan to reach them and how you will measure progress to make sure you are on track.

While an IPS is usually a document that an investment firm provides clients, there is no reason you can’t have one for yourself if you are investing on your own. Everyone who wants to be a successful investor needs to have a formal or informal IPS.

To get started on your own, I recommend Morningstar’s Investment Policy Worksheet, which you can find online at tinyurl.com/y5xgkr9r.

The worksheet takes you through six sections: 1) a summary of where you are currently, including how much of a loss you can “accept” over different time periods; 2) your financial goals; 3) your investment philosophy, which goes into what is important to you as an investor and your assessment of risk; 4) your philosophy about taxes; 5) your investment selection criteria; and 6) your monitoring procedures.

Yes, monitoring comes at the end, after considering all the other factors that drive the success or failure of an investment program, including the very important element of risk. How else could you possibly know if you are on track?

Returning to my discussions with investors, over the years, I have found that when talking about performance, risk is not mentioned. Someone who goes through the IPS process will need to address risk and have a sense of what to do in a rapidly declining market such as we experienced this year, when the S&P 500 Index fell 34% from Feb. 19 through March 23.

To learn more about the IPS, an excellent publication comes from the CFA Institute. The institute is a nonprofit whose goal is to build a better world for investors. The publication, “Elements of an Investment Policy Statement for Individual Investors,” is available for free online at tinyurl.com/yxehcgwm.

On another note, no matter where you are located, I invite you to join me at a free virtual presentation, “Investing in a Coronavirus Stock Market,” on Wednesday, Oct. 28, at 10:00 a.m., sponsored by the Greenwich (Connecticut) Library. To register, go to tinyurl.com/y36nzo7n or contact Yang Wang, 203-622-7924, ywang@greenwichlibrary.org. This is part of the library’s financial and investment programs.

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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“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.

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

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.

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