Today we welcome back a special guest: Stelter’s Senior Gift Planning Consultant, Lynn M. Gaumer, J.D. In her role, Lynn keeps a close watch over tax legislation, research and trends that could affect your planned giving program.
Did you know that New York has adopted its own methodology for determining its maximum annuity rates for immediate single-life annuities issued to New York residents? If your organization issues gift annuities to New York residents, continue to promote them. But keep these points in mind when you do:
- The New York rates do not apply to two-life or deferred annuities.
- New York updates its rates on a quarterly basis.
- New York’s maximum rates are different for men and women.
WHAT DOES THIS MEAN?
Until recently, the maximum rates suggested by the American Council on Gift Annuities (ACGA) have consistently been lower than the New York rates. So it’s been a non-issue for many charities that use ACGA rates. However, after New York recently implemented a new methodology, its maximum gift annuity rates now tend to be lower than the ACGA-suggested rate for most ages. So New York residents need to be mindful that there could be a difference between New York and ACGA rates. If you are issuing a CGA to a New York resident and the New York rate is lower than the ACGA rate, you must use the New York rate. Again, it only becomes an issue when the New York maximum rates are lower than the ACGA rates.
To give you an idea of the rates, here is a sampling:
You can find a complete list of the New York rates here. To calculate the current New York maximum payout rate, scroll down to the Q2 rates for 2021. Locate the donor’s age and “Maximum Income” value, then divide by 10.
WHO DOES THIS AFFECT?
Charities that offer gift annuities to New York residents and New York residents who are interested in creating a CGA.
NEXT STEPS
Representatives from the ACGA and the New York Department of Financial Services are working on a solution. You can read the latest news here. In the meantime, continue to promote gift annuities to New York residents. And when you do, Stelter recommends that you add a new disclaimer with rate charts or scenarios, similar to this language: “If you reside in New York, please contact us directly as your rates may vary slightly.”