Planned Giving Insights and Information

ACGA Rates Remain Well Below NY Maximum Annuity Rates Through 6/30/2025

New York has announced its maximum one-life annuity rates applicable to immediate gift annuities issued to New York donors from January 1, 2025 through June 30, 2025. All these rates remain well above the corresponding maximum annuity rates suggested by the American Council on Gift Annuities (ACGA). New York does not publish its maximum annuity rates for two-life immediate gift annuities, nor for one-life or two-life deferred gift annuities. However, PG Calc is able to compute these New York maximum rates ourselves. We have spot-checked these rates over a range of typical ages and deferral periods, and in every case, the New York maximum rate is well above the corresponding ACGA rate.

Pledge to Make a QCD

When the qualified charitable distribution (QCD) from Individual Retirement Accounts (IRA) was first introduced in 2006, the timing for colleges and universities that push for 50th reunion gifts could not have been better. The new outright gift was available to donors who were age 70 ½ or older, which cleanly aligned with the age of many 50th reunion alumni. In 2006, a donor who was age 70 ½ or older was also faced with making a taxable required minimum distribution (RMD) from their IRA. The QCD outright gift provided relief by allowing a tax-free withdrawal. While there was no charitable deduction, donors benefitted by avoiding ordinary income tax on the portion of their RMD fulfilled by their QCD and receiving reunion credit for their gift. Over time, the age at which a donor could make a QCD gift diverged from the age at which they must begin taking withdrawals from their IRA. In 2025, a donor can make a QCD at age 70 ½ or older, but they are not required to take an RMD until age...

The Donor Must Be the Owner

We frequently work to assist our clients in situations involving married couples. In some cases, the spouses are looking to establish a 2-life charitable gift annuity (CGA), whereby they will both be donors and they will both be beneficiaries (annuitants). There is no issue with potential gift tax consequences in cases where the couple’s marriage is recognized by federal law – such spouses may transfer unlimited amounts of wealth to each other without any possible gift tax. And if the CGA is funded with cash, there also is no issue with possible income tax, because there are no capital gains involved in the transfer of cash. If the gift annuity is funded with appreciated securities, however, there can be significant tax issues tied to the long-term capital gains inherent in the appreciated securities.

IRS Announces Tax Schedules, Exemptions, and QCD Limits for 2025

Many federal tax items are indexed annually for inflation, such as the income tax brackets for individuals and trusts, the standard deduction, the gift and estate tax exemption, and qualified charitable distribution (QCD) limits. The IRS recently announced what the new amounts will be for all 63 of these items in 2025. The new values will increase about 2.8% over the 2024 values they will replace. All of these changes are minor and should have little effect on the tax incentives that encourage donors to make charitable gifts.