The American Council on Gift Annuities (ACGA) recently announced that the suggested maximum payout rates will increase for new charitable gift annuity contracts issued beginning January 1,2023. The payout rates of contracts already in place or of new annuity contracts issued prior to January 1st are unchanged. The maximum annuity payout rates will be higher by approximately 0.6%, which presents an opportunity to make donors aware of the upcoming rate increase. The ACGA also increased the annual gross investment return expectation on gift annuity funds from 4.5% to 5.25%.
Many charities may wonder if the new ACGA rates may be offered to donors before the effective date. Due to charitable gift annuity state regulations, we recommend that charities only offer the higher rates on or after the effective date of January 1, 2023.
Also, a reminder regarding New York annuities, New York has approved a new method for maximum annuity payout rates for annuities issued to New York residents. These rates would supersede the ACGA maximum rates for New York annuities only if lower than the ACGA rate. New York has been updating these rates on a quarterly basis. There is a bill in the works to change the rates statute. The bill has passed the New York Senate, but the New York State Assembly did not take up the bill in 2022.
The new ACGA rate recommendations will make charitable gift annuities more attractive to donors. For more information, please visit the ACGA website – https://www.acga-web.org/
One other recent change comes from the IRS regarding changing the mortality table used to calculate the charitable deduction from the 2000CM to the 2010CM. Currently, one is given the choice by the IRS of performing charitable deduction calculations using Table 2000CM or Table 2010CM. It is not certain how much longer the 2000CM table will be available for calculations. Once the IRS publishes final regulations regarding the 2010 CM mortality table, only the 2010 CM table may be used. We encourage organizations to begin discussions of using the 2010 CM mortality table for charitable deduction calculations. Please note that Crescendo has not yet added this option to CresManager.