When I wrote about the suspension of required minimum distributions (RMDs) for 2020 by the CARES Act, which was signed into law on March 27, I received a number of emails from readers who could not take advantage. They had taken their RMDs earlier in the year, and there was no way for them to redeposit their RMDs if they couldn’t meet the rollover rules, which had two barriers: a 60-day time limit and a once-in-a-12-month-period limitation.

W.E. was affected: “My 2020 RMDs were received after the 2020 RMD Suspension was retroactively in effect, but before it was announced on 3/27/2020. Since the suspension of 2020 RMD was intended to benefit all seniors by reducing their 2020 tax burden and help to preserve their battered 401(k)s, I feel that I should be entitled to take full advantage afforded me being able to return and reverse my 2020 RMDs.”

He continued, “Can you make any suggestions on how seniors in my position, having received multiple suspended 2020 RMDs before the 2020 RMD Suspension was announced, can receive fair treatment and fully benefit from the CARES ACT?”

W.E., I have good news for you. On June 23, 2020, the IRS came through when it issued Notice 2020-51, which you can find here: tinyurl.com/y8o2zxjp.

The 60-day rollover period for RMDs in 2020 has been waived as well as the 12-month rule for anyone who has taken their RMDs so far this year. But, you have to do the rollover before Aug. 31.

First, any taxpayer who is subject to RMDs in 2020 from a defined-contribution retirement plan, including a 401(k), 403(b) plan, or an IRA (but not a defined benefit plan), can skip RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020.

Second, anyone who took RMDs in 2020 and would like to “undo” them has until Aug. 31, 2020 to redeposit the RMDs. That is, an IRA owner or beneficiary who has already received a distribution from an IRA of an amount that would have been an RMD in 2020 can repay the distribution to the IRA by Aug. 31, 2020. There is no limit on the number of rollovers if you withdrew moneys multiple times or from multiple IRAs and other tax deferred accounts.

The notice also makes clear that RMDs from inherited IRAs are also eligible to roll over under Notice 2020-51.

R.R. wrote: “I am 77 years old with my birthday in December. I have been taking the RMD since I was 70 1/2.” R.R. then asked an important question: If he doesn’t take his 2020 RMDs, will he be required to take two RMDs in 2021? The answer is no. This is a suspension of 2020 RMDs, not a delay.

L.B. wrote: “I moved a large sum of money from my IRA into my cash account on Jan. 2 this year. With the new ruling I'd like to move it back to my IRA. Can I?” Now that we have Notice 2020-51, the answer is yes, but you must act before Aug. 31.

J.B. wrote: “I am 77 years old and have been taking my RMD the last four years. This year with the break on RMDs, I plan to roll some money over from my traditional IRA into my Roth IRA and still keep within my tax bracket. Normally I would have to take my RMD before I could do a rollover.” He then asked: Can he use the withdrawal to do a taxable Roth conversion? The answer is yes. Since the RMD he took in 2020 no longer has the character of an RMD (since RMDs are suspended), there is no restriction against using those moneys to convert to a Roth.

So, all in all, very good news for early bird RMDs. We can all agree with Melissa Ridolfi, the vice president of retirement and college products at Fidelity Investments, who said, “The fact the IRS has extended the date for retirees to repay a distribution into their IRA -- up to August 31 -- is welcome news.”

For a quick video that covers the topics we’ve discussed in today’s column, go to vimeo.com/432667715/e74f8e0997.

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

Have you received a plain envelope containing a Visa debit card from Money Network Financial? A few readers have shown me their letters, and I must say, the first question that comes to mind is whether it’s legit. After all, my readers didn’t apply for a debit card -- and who is Money Network Financial?

One of the readers received an enclosure that said:

“Enclosed is your Economic Impact Payment Card. This prepaid debit card is being sent to you on behalf of the U.S. Department of the Treasury in place of a paper check. This card contains the money you are receiving as a result of the Coronavirus Aid, Relief and Economic Security Act (CARES Act).”

Then it offers additional information on the economic impact payments (EIPs) at IRS.gov/EIP, and it refers to instructions to activate the card at EIPCard.com.

Yes, this happens to be an official card. But be aware that the IRS is cautioning about scams.

Here is what I’d like you to do: Visit the IRS’ Economic Impact Payment Information Center at tinyurl.com/tbhar5r.

There you will find a series of questions and answers. Look at Q48. It turns out the Treasury Department’s Bureau of the Fiscal Service hired Money Network Financial LLC to do the card servicing; the Visa card is issued by the Treasury’s financial agent, MetaBank, N.A.

The card arrives in the mail in a plain envelope from “Money Network Cardholder Services.” Visa is stamped on the front of the card; the back of the card has the name of the issuing bank, MetaBank, N.A.

Since security is on everyone’s mind, the IRS will follow the card with a letter to explain the payment -- and instructions on what to do if you did not receive it. If a taxpayer is unsure that the letter is legitimate, the IRS urges taxpayers to visit IRS.gov first to protect against scam artists.

As to scams, if you get a call, text, email or a social media contact asking for personal or bank account information related to economic impact payments, that’s a scammer. The IRS also cautions you to “watch out for emails with attachments or links claiming to have special information about economic impact payments or refunds.” Again, those are scammers, not the IRS.

What if you don’t want a debit card? In the answer to Q49, the IRS says that you can go online to EIPcard.com or use the Money Network Mobile App to transfer the debit card balance to your bank account. You will need your bank’s routing and account numbers.

Want to double-check your payment amount? Review Q24, “How do I calculate my Economic Impact Payment?” What if you received less than you think you should have? Perhaps you were due qualifying child payments that were not included. According to the answer to Q32, you will be able to claim the additional amount when you file your 2020 tax return. Make sure to keep the notice you received regarding your economic impact payment with your 2020 tax records (the notices are mailed to each recipient’s last known address within 15 days after the payment is made).

Will an economic impact payment increase your taxable income? Q34 confirms that the answer is “no.” The payment is not considered part of your gross income. Therefore, you will not include it on your federal income tax return or pay income tax on it. The payment will not reduce your refund or increase the amount you owe when you file your 2020 federal income tax return, and it will not affect your income for purposes of determining eligibility for federal government assistance.

What if you don’t want your EIP? You can reject it; no hard feelings. In Q64, you’ll see that you can send the card back if you want to return the money to the IRS and NOT have the payment reissued.

For a quick video that covers the topics we’ve discussed in today’s column, go to vimeo.com/430839995.

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

While news reports are focused on the pandemic, the economy and important social issues, a silent evolution in the financial services industry is underway. By the end of this month, investors will have available an easy way to distinguish between financial professionals, thanks to the U.S. Securities and Exchange Commission. The SEC regulates the financial services industry.

What is this new tool?

It’s called the CRS, which stands for “customer relationship summary”; you will be receiving a copy from your “broker” or “adviser” (there is a difference) very soon. If you are in the market for a new broker or adviser, the CRS will help you shop. That’s what it was designed to do.

Every broker or adviser with whom you do business must provide you with a CRS that follows a recipe: a mandated question-and-answer format presented in a prescribed order.

What’s behind this mandate? The SEC’s goal is to “promote consistency and comparability among different relationship summaries.”

What’s in the document? A summary of fees and costs; a description of ways the firm makes money; conflicts of interest and standards of conduct; financial professionals’ compensation; and whether financial professionals have reportable disciplinary history.

The CRS must also contain mandated “conversation starters,” which are intended to help investors “dialogue with their financial professionals about their individual circumstances.”

Take this example: “Given my financial situation, should I choose a brokerage service (or an investment advisory service)? Why or why not?”

And these examples:

-- “How will you choose investments to recommend to me?”

-- “What is your relevant experience, including your licenses, education and other qualifications? What do these qualifications mean?”

-- “Help me understand how ... fees and costs might affect my investments. If I give you $10,000 to invest, how much will go to fees and costs, and how much will be invested for me?”

-- “How might your conflicts of interest affect me, and how will you address them?”

This last question is probably the most difficult for individuals to understand -- after all, what is a conflict? The reason to ask the question, and to listen to the answer carefully, is this: The question “underscores for retail investors that investment advisers and broker-dealers have conflicts that may create incentives to put their interests ahead of the interests of their retail clients and customers,” quoting the SEC.

Potential conflicts can be proprietary products, third-party payments, revenue sharing, principal trading and the payment of fees to someone to refer clients, to name a few.

There are two more conversation starters:

-- “As a financial professional, do you have any disciplinary history? For what type of conduct?”

-- “Who is my primary contact person? Is he or she a representative of an investment adviser or a broker-dealer? Who can I talk to if I have concerns about how this person is treating me?”

These new disclosure documents will be very important for you to read and discuss with your financial professional. They will likely open up new avenues to explore when considering your needs. And they will help you when you are shopping for a new financial professional, especially in times of transition, such as a divorce, change of a job or approaching retirement.

Finally, getting back to the point that there are differences between investment advisers and brokers, I recommend watching a video posted on SEC.gov by SEC Chairman Jay Clayton on that topic, which you will find here: youtube.com/watch?v=FZNCce1spHQ.

You’ll also find details on the CRS at Investor.gov/CRS, a page on the SEC’s investor education website that will offer educational information about investment advisers, broker-dealers and individual financial professionals.

For a quick video that covers the topics we’ve discussed in today’s column, go to vimeo.com/428599231/f41fd5c1ae.

When you receive your CRS from the brokerage firms and advisers you work with, let me know what you think. Are they helpful? Do they raise questions? Write to me at readers@juliejason.com.

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