Update on Tax Legislation

Tax legislation may seem a distant possibility – the Senate is focused on a Supreme Court appointment and Democrats lack a majority during Senator Lujan’s medical leave. Still, we should bear in mind the major bills that could have an impact on charitable giving:

Build Back Better Act (HR 5376)
Having passed the House but failing to secure a majority in the Senate, leadership now plans to take up its provisions piecemeal – but the order and timing are uncertain. Key provisions related to charitable gift planning include:

• Create a new top income tax bracket of 39.6% for those making more than $400,000.
• Implement a 3% income tax surcharge on income above $5 million.
• Add a new top capital gains rate of 28% for those making more than $400,000.
• Reduce the estate tax exemption to $6,020,000.

Accelerating Charitable Efforts Act – S 1981
The “ACE Act” delineates between qualified and non-qualified donor advised funds and makes contributions to a non-qualified donor advised funds deductible only after the funds are distributed. It is noteworthy that the author, Senator King, and the only co-sponsor, Senator Grassley, are senior members of their caucuses and that a companion bill was introduced in the House earlier this month.

Securing a Strong Retirement Act – HR 2954
The “Secure Act 2.0” makes dozens of changes to qualified retirement plans, including raising the Required Minimum Distribution age to 75, but there are no changes to Qualified Charitable Distributions. The bill has broad bi-partisan support in the House, and there is a companion bill in the Senate.

CARES Act Giving Incentives Expired at End of 2021

There has been hope that provisions introduced by the CARES Act in 2020 to encourage charitable giving, which were then extended through 2021, would be extended again for 2022. That has not happened. The following provisions expired on 12/31/2021 unless and until new legislation passes that extends these provisions beyond 2021, which doesn’t look likely anytime soon:

• The 100% of adjusted gross income (AGI) limit on deductions for cash contributions to public charities has expired. This limit is once again 60% of AGI.
• The $300 charitable deduction for non-itemizers who make cash contributions to public charities ($600 for married couples filing jointly) has expired. Non-itemizers once again get no tax benefit from making charitable contributions.
• The 25% of taxable income limit on deductions for cash contributions by corporations to public charities has expired. This limit is once again 10%.
• The 25% of aggregate net income or taxable income limit on deductions for contributions of food inventory by any trade or business has expired. This limit is once again 15%.

Legislation to Change NY Maximum Rates Formula Beginning to Move

On January 5, New York Assembly Bill A8164, sponsored by Assembly Member Kevin Cahill, was referred to the Insurance Committee. On January 25, New York Senate Bill S8134, sponsored by Senator Neil Breslin, and identical to A8164, was also referred to the Insurance Committee. This means the bill now has the two sponsors it needs to move forward. This is an important step toward changing New York’s formula for determining its maximum annuity rates in a way that would make it highly unlikely that its maximum rates would continue to be lower than the American Council on Gift Annuity rates at some ages. Several steps remain for this change to become law, however. We are keeping a close watch.

In the meantime, the New York maximum rates for 1-life annuities issued in Q1 2022 are available here. Note that we were slightly wrong in our prediction in the last eRate that the New York maximum rates for Q1 2022 would be lower than the ACGA suggested maximum rates for male ages 51-84 and female ages 50-87. Now that the Q1 2022 rates are public, we can see that the correct range of male ages is 50-84. We were right regarding the female age range of 50-87.

ACGA Offering Generous Scholarships

The American Council on Gift Annuities is seeking applicants for scholarships funded by its Terry L. Simmons Endowment. The scholarships provide the following valuable benefits to young and aspiring professionals as well as to development staff at organizations that cannot otherwise afford them:

• A 2022 conference registration.
• A 1-year ACGA membership for your organization.
• Free access to all ACGA webinars from June 2022 to June 2023.

If you are interested in applying for one of these scholarships, login or enter your email address here, then follow the instructions to complete the application. Sign up for the conference here.

Date of First Payment vs. Annuity Starting Date

When doing calculations for a deferred gift annuity, two dates related to the timing of the first payment come into play: the date of first payment itself and the so-called “annuity starting date.” While the date of first payment is the far more familiar concept of the two, only the annuity starting date is a central component of calculations performed in PGM Anywhere. Gift planners will benefit from understanding the difference between these two dates and how they are used in PGM Anywhere’s calculations.

Learn the difference in our Knowledge Base Article.

Now Is the Right Time!

We are still in the early part of a new year, and there’s no better time to look at
PG Calc’s training and webinar offerings. We’ve established a training schedule for the first 6 months of 2022 - and we’ve published a webinar schedule for the entire year. Registering for any of the sessions or webinars is easy to do on our newly revised web site. If you are unsure about any of our offerings, please call us at 1-888-474-2252 and we’ll be more than happy to go over the content of any session or webinar.

The Children's Inn at NIH Partners with PG Calc for Endowment Sub-Accounting

“We have been using PG Calc for our fund accounting needs since Summer of 2020. They are always professional and willing to work with us to get the reports we need. If an unusual situation arises, they are proactive to check with us to determine how it should be handled in advance. They provide accurate reports earlier than promised, which is always a nice surprise. PG Calc is a 'Yes we can' kind of company, very reasonably priced for the personal service they provide, and always respond to inquiries in a timely manner.”

—Jean Buergler
Senior Director of Finance
The Children's Inn at NIH

Learn more about The Children's Inn at NIH.

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