Private Letter Rulings and Planned Giving: Yes, You Need to Know This
The Internal Revenue Service defines a private letter ruling, or PLR, as a statement issued to a taxpayer that interprets and applies tax laws to the taxpayer's specific set of facts. A PLR is issued to establish with certainty the federal tax consequences of the applicant’s tax question, and the findings are binding on the IRS. The resolution of the tax question in the requested PLR may not be relied on by other taxpayers. The PLRs are generally made public after the taxpayer’s identifying information has been removed from the document.
PLRs are important to planned giving to understand innovative gift planning opportunities. Although the PLRs are not binding on other taxpayers, donors and their advisors have a better understanding of how the IRS would rule when presented with a case with the same facts. While other donors may not rely on private letter rulings, certain unique planned giving options are now more common based on the PLR outcomes, such as flexible and step gift annuities, reinsured charitable gift annuities, commuted payment gift annuities, and more.
Why Would My Organization Want Its Own DAF Program? (FREE)
Donor-advised funds have become a major source of charitable dollars that continues to grow. More and more charities are sponsoring their own DAF programs. New technology is making it easier than ever for charities to offer the convenience and flexibility of DAFs to their own donors. Why would my organization want to do that? Will a DAF attract new donors and/or larger donations? Attend this webinar with Gary Pforzheimer and Stephen Kump to learn the answers.
PGM Anywhere Quick Tip: Search Everything, All at Once
Quick Tip: GiftWrap Makes It Easy to Manage the Start Date for Flexible Gift Annuities
From the Blog: What’s the Difference Between the Gift Annuity Rate and the Discount Rate?
New PGM Anywhere Release Can Compute Present Values of Projected Amounts
Discount Rate Election: Choose Wisely, Then Notify the IRS
Now You Should Rush: E-File Your 1099-Rs with the IRS
ACGA Rates Will Not Change at This Time
PG Calc Turns 40!
March 15, 2025 marks the 40th anniversary of PG Calc. It all started when Gary Pforzheimer and Winston Jones, who were students at the time, and recent grads Mary Pforzheimer and Bill Laskin worked together in the Harvard University planned giving office. They were looking for an easier way to calculate planned gifts. As they began developing custom gift calculations software, they started hearing from planned giving offices at other universities that were interested in having access to the software. PG Calc was born.
Forty years later, PG Calc has evolved into a full-service software and services company that helps over 2,200 clients and charities with their planned gift illustrations, planned giving marketing, gift administration and stewardship, and consulting with them to help grow and improve their programs. Last year, PG Calc became the planned giving division of Foundation Source, the leading software and services provider for private and family foundations. And this fall, Foundation Source added Vennfi, the technology company that powers donor-advised funds, such as the one sponsored by Charityvest, with DAF solutions and administrative software.
Our PG Calc team is proud of the work we do on behalf of the thousands of clients and charities we support, and we thank our clients for making us a part of their planned giving success and trusting PG Calc for 40 remarkable years. Our team shared their thoughts, memories, t-shirts, and reflections about our 40th anniversary, and you can watch their videos here.
PGM Anywhere Quick Tip: Search Everything, All at Once
Sometimes, it can be very helpful to go back and review an older gift proposal that you saved in PGM Anywhere, particularly if you’re trying to remember the presentations you selected to showcase a particular gift type.
If you can’t remember the name of the donor, or the case name, you can always ask PGM Anywhere to show you every case you’ve saved in its database.
1. Click Open
2. Leave all the search fields blank and click Search
PGM Anywhere will produce a list of all your saved cases, sorted by modification date from most recent to least recent.
You can scroll through the cases in the list as is or click the Date modified heading to reverse the sort order of your cases from least recent to most recent. You can also click one of the other headings to sort your cases alphabetically by Case name, Donor name, Organization, or the staff person assigned to each case.
Contact Client Services at support@pgcalc.com or at 888-474-2252 if you need help.
Quick Tip: GiftWrap Makes It Easy to Manage the Start Date for Flexible Gift Annuities
When an annuitant decides to start receiving annuity payments from their flexible gift annuity (FGA), you can easily update both the payment and taxation information in GiftWrap.
Click the FGA icon on the toolbar of the gift record:
A message will appear asking you if you want to update GiftWrap with a payment start date.
Click Yes.
Enter the date selected by the annuitant into the date field.
Then click Save.
A popup message will summarize the changes you are making to the payment and taxation records.
Click Yes to continue, then click Update.
GiftWrap will populate with the appropriate payment tiers and taxation of income.
Contact support@pgcalc.com or call us at 888-474-2252 if you have questions or need help.
From the Blog: What’s the Difference Between the Gift Annuity Rate and the Discount Rate?
We get this question from time to time. The gift annuity payout rate is used to determine the annuity payment amounts. The annuity payout rate is typically a suggested rate by the American Council on Gift Annuities (ACGA), and the annuity payout rate is based on the life expectancy of the annuitant.
The IRS discount rate is used to calculate the donor’s charitable deduction. The IRS discount rate is published monthly, and it is based on the average interest rate for medium-term United States Treasury Bonds. The higher the discount rate, the larger the charitable deduction.
New PGM Anywhere Release Can Compute Present Values of Projected Amounts
On March 17, we announced our latest release of PGM Anywhere, our online planned gift illustration software. This update adds the ability to compute the present value of projected amounts, such as the present value of a projected remainder to your charity. We have also improved accessibility, added a “Show password” option to the login screen, and fixed a couple of bugs. For full details on these improvements, click the “Release Notes” link on the PGM Anywhere login screen.
Contact support@pgcalc.com or call us at 888-474-2252 if you have any questions about the new features.
Discount Rate Election: Choose Wisely, Then Notify the IRS
For valuing certain interests transferred to charity, including split interest gifts such as charitable gift annuities (CGAs), charitable remainder trusts (CRTs), and charitable lead trusts (CLTs), the donor is entitled to choose the IRS Discount Rate from either the month of their gift or one of the two previous months. However, if the discount rate selected is for one of the two months preceding the gift, the donor must notify the IRS of their choice by attaching a discount rate election statement to their IRS Form 1040 filing. (Reg. Sec. 301.9100-8(a)(1))
The IRS discount rate used to calculate the deduction for split interest gifts changes each month. Announced around the 15th of each month (and the impetus of this newsletter), the discount rate affects the donor’s charitable deduction for establishing a split interest gift. For life income gifts, the higher the discount rate, the greater the charitable deduction; the inverse is true with CLTs. Also, the lower the discount rate, the greater the tax-free portion of the payments from a CGA.
The impact of the discount rate on the deduction is especially pronounced for life income gifts that make fixed payments, such as CGAs and charitable remainder annuity trusts. For instance, a 72-year-old donor who established a CGA on January 1, 2025, with $10,000 cash, could choose between January’s discount rate of 5.2%, December’s rate of 5.0%, and November’s rate of 4.4%. The difference in the value of the deductions between the highest discount rate and the lowest discount rate available would be $356.
A donor interested in maximizing their deduction should stick with the highest discount rate – in this case, the rate for January of 5.2%. Since the highest discount rate was for the month of the gift, the donor would not need to attach a discount rate election statement to their IRS Form 1040 to claim their deduction.
While the discount rate is irrelevant to income taxation of CRTs and CLTs, the discount rate drives CGA taxation. In the case above, if the donor wanted to maximize their tax-free income, they could choose the lowest possible discount rate of 4.4% for November. This would generate $356 more tax-free income paid each year for the annuitant’s life expectancy. If the donor elects a discount rate other than the one applicable in the month of the gift, they absolutely must file a discount rate election statement with their IRS Form 1040.
While the IRS does not offer tax filers a specific form to complete to declare their preferred discount rate, it does provide guidance on what the statement must contain in Reg. Sec. 301.9100-8(a)(1). The IRS discount rate election statement found in the Presentations > Narratives section of PGM Anywhere conforms to this guidance.
Gift officers are encouraged to select the IRS discount rate election form when finalizing calculations for split interest gifts using a discount rate for a month prior to the month of the gift. If the discount rate election is for the month of the gift, PGM Anywhere will notify you that the form is not necessary and drop it from your results.
Now You Should Rush: E-File Your 1099-Rs with the IRS
In our eRate newsletter of February 19, 2025, we encouraged our clients not to rush to submit their electronic files to the IRS. Electronic files are due on March 31, but we encouraged clients to allow some time for the paper 1099-Rs mailed by January 31 to trigger updates to their annuitant data.
It is often when a charity’s postbox fills up with 1099-Rs marked “return to sender” that address changes and annuitants’ deaths can be recorded. Having time to allow your data to be updated before e-filing limits the likelihood that you will need to file a corrected return with the IRS.
However, the time for strategic delay has passed. Now that we’ve passed the Ides of March, charities should no longer delay their electronic filing but move to submit their files through one of the IRS’s electronic filing portals, FIRE (compatible with GiftWrap) or IRIS.
Clients with GiftWrap needing assistance in preparing their files for electronic transmission are encouraged to reach out to Client Services at support@pgcalc.com or 888-474-2252 for assistance.
ACGA Rates Will Not Change at This Time
The American Council on Gift Annuities (ACGA) has announced that it will not be changing its suggested maximum gift annuity rates at this time. The ACGA noted in its message that it “closely monitors market conditions and will change rates as necessary to provide Suggested Maximum Payout Rates that are attractive to both the annuitant and the issuing charity.” The current ACGA rates became effective on January 1, 2024.
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