Planned Giving Insights and Information

Why Are the K-1s Late Again This Year?  Why Are They Late Every Year??

It happens every year – your gift annuity donors received their 1099-R forms at the end of January, and everyone was happy. But once the calendar turned to February, the calls started coming in from your charitable remainder trust donors; they are looking for their K-1 forms, which report the income they received from their trusts. If you have a pooled income fund, you’re getting calls from those donors too, because they are also entitled to a K-1 form. And once the calendar turns into March, the calls get uglier. Everyone expected to receive their tax forms around the end of January, because that’s when all tax forms are due, right?

A Deduction for Non-Itemizers? Not so fast.

Non-itemizers would be able to take advantage of an expanded charitable deduction under a bill introduced by Senator James Lankford (R-OK). “The Charitable Act” (S.566) would permit those who elect the Standard Deduction to claim an additional charitable deduction up to one-third of the Standard Deduction amount for two years only, 2023 and 2024. This year, one-third of the Standard Deduction for a married couple filing jointly is a little over $9,200. It is half that for a single filer. The Bill, which has ten bipartisan co-sponsors, has been referred to the Senate Finance Committee. There is no companion legislation in the House of Representatives.

Gift Annuity Contracts Filed with State Regulators and the Legacy IRA Act

As we’ve discussed in other blog posts, it is now possible to use a qualified charitable distribution (QCD) from an IRA to fund a charitable gift annuity (CGA). Among the specific requirements set forth in Section 307 of the Consolidated Appropriations Act, 2023 (“the Act”) is that the “income interest” of such an annuity be non-assignable. Our interpretation of the Act is that the income interest in a CGA may not be assigned to anyone, including the issuing charity. Many gift annuity agreements, including those included in PG Calc’s PGM Anywhere and Planned Giving Manager (desktop) software, provide that the annuity is non-assignable “except that it may be assigned to the charity.” That exception is specifically provided for in Reg. Sec. 1.1011-2(a)(4)(ii), which allows for ratable reporting of capital gain when a long-term capital gain asset is used to fund a CGA if the annuity is non-assignable or only assignable to the charity issuing the CGA.

New York Maximum Immediate Annuity Rates Remain Higher Than ACGA Rates for Q1 2023

Despite the increase in American Council on Gift Annuities (ACGA) rates that went into effect on January 1, 2023, New York 1-life maximum rates are higher for gift annuities funded in Q1 2023 than their corresponding 1-life ACGA rates at all male and female ages. Even better, our testing of 2-life immediate payment annuity rates over a range of age combinations suggests that all NY 2-life maximum rates are greater than their ACGA rate counterparts. We also haven’t found a case where the New York maximum rate for a 1-life deferred annuity is lower than the ACGA suggested maximum deferred rate, although it can come close.