Stelter’s Senior Gift Planning Consultant, Lynn Gaumer, J.D., is in to answer your questions on the new mortality tables.
The IRS recently released its final regulations for new mortality tables. The previous mortality tables (IRS Table 2000CM) relied on life-expectancy data from 2000, while the new tables are based on data from 2010 (IRS Table 2010CM).
Mortality tables are used to value deductions and life interests for split-interest gifts, such as charitable gift annuities, charitable remainder trusts, charitable lead trusts and retained life estates.
When did the proposed regulations become final?
IRS final regulations became final on June 7, 2023. (Download Treasury Decision 9974.)
How does 2000CM differ from 2010CM?
In general, the life-expectancy calculation under the new tables assumes a longer life expectancy. For example, an individual’s life expectancy at age 65 increases by about 1.4 years.
Can I still use the 2000CM?
No. Donors must use Table 2010CM for gifts made on or after June 2, 2023.
Is there a benefit for my donors under the new tables?
It depends. If your donor is interested in a higher tax-free payment, yes, as the total tax-free portion increases. However, if your donor is interested in the charitable deduction, no, as that will decrease.
Here’s an example:
Under the previous mortality table 2000CM:
Barbara, 75, transfers $25,000 in exchange for a charitable gift annuity. She receives a charitable deduction of $11,614* when she itemizes. She will receive annual payments of $1,650. A portion of her payment ($1,079) will be tax-free.
Using the new table 2010CM:
Barbara, 75, transfers $25,000 in exchange for a charitable gift annuity. She receives a charitable deduction of $10,684* when she itemizes. She will receive annual payments of $1,650. A portion of her payment ($1,155) will be tax-free.
*Assumes a 4.6% CMFR
Should I market this to my donors?
No. The new tables may or may not benefit your donors depending on their tax situation. But, this may be a good opportunity to talk with those donors interested in a split-interest gift (like a gift annuity) to receive higher tax-free payments. And remember, if you are promoting gift annuities, be sure to highlight that rates are higher now than they have been in over a decade.