Planned Giving Insights and Information

Gift Annuity Voluntary Termination – What to Do and How to Do It

If you have an annuitant who finds their gift annuity income “nice, but not necessary,” they may be interested in voluntarily giving up their right to future annuity payments. Voluntarily releasing, or terminating, their interest in a charitable gift annuity (CGA) allows the charity to access the residuum early. The charity can also count part of the released amount as a new outright gift. Voluntary termination is also an effective way of managing the issue of a CGA that is wasting. An annuitant who is charitably inclined may agree to terminate their annuity to spare the charity the continued expense of paying the annuity from general operating funds.

Analysis of the New 2024 ACGA Annuity Rates

On November 22, 2023, the American Council on Gift Annuities (ACGA) informed its members that it would be increasing its suggested maximum annuity rates, effective January 1, 2024. The ACGA made its 2024 rates public earlier today, December 26. The 2024 rates replace the rates that became effective January 1, 2023. The ACGA’s decision to increase its suggested maximum gift annuity rates was triggered by the sharp rise in interest rates between May and November 2023. A net investment return assumption of 4.75% underlies the ACGA’s 2024 rates, an increase from 4.25%.

From the IRS: Donors Can Give More and Pay Less in 2024

The IRS has announced increases in tax exemptions, qualified charitable distribution (QCD) gift limits, and standard deductions for 2024. Gift planners will want to pay particular attention to how these changes impact their donors.

New York Max Annuity Rates Legislation Signed into Law!

It has been a long time coming, but New York legislation that should greatly reduce the likelihood that any of its maximum annuity rates will be lower than the corresponding maximum rate suggested by the American Council on Gift Annuities (ACGA) has finally become law. Governor Hochul signed New York Bill A4599a on October 25. The new law will go into effect 90 days from that date, so the New York maximum rates computed using the old method will continue to apply until January 23, 2024. We know that all 1-life New York maximum rates for the current quarter (Q4 2023) are higher than their ACGA rate counterparts, and hence not a problem for charities that follow the ACGA rates, but we can’t be as sure about 2-life gift annuities or 1-life and 2-life deferred gift annuities. For these annuities, the safe thing to do while the old method is still in play is to determine the New York maximum rate and then offer that rate or the ACGA rate, whichever is lower.