IRS Applicable Federal Midterm Rate for March 2012 is 1.4%.

The Valuation Rate for New Pooled Income Funds in 2012 is 1.8%. See an expanded explanation of how this rate is calculated.

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In this issue:

• Featured Article: Gifts of Gold
• HelpClip: Blending Federal and State Income Tax Rates
• Quick Tip: Reissuing 1099-R Forms
• IRS Revises 2011 Reporting Requirements for Capital Gains Distributed by Charitable Gift Annuities
• New Michigan Tax Law Requires Withholding from Annuity Payments
• Marketing Corner with Ann McPherson: The Four Steps to Branding
• PG Calc “Far and Away” Mount Holyoke College’s Best Option for Gift Administration
• Change in New York Gift Annuity Agreements
• Join Us at the American Council on Gift Annuities (ACGA) Conference
• Upcoming Webinar: Meeting the Challenge of Qualifying Planned Giving Prospects, February 23
• Group Training Sessions Prior to ACGA Conference

Gifts of Gold
When investors become skittish about the economy, many of them sell their publicly-traded securities and buy gold. This has certainly been the case over the last ten years. The increased demand for gold has caused gold prices to rise dramatically. An ounce of gold sells today for about five times what it sold for ten years ago.

Read this article...

Past topics...

HelpClip: Blending Federal and State Income Tax Rates
By default, Planned Giving Manager (PGM) applies the top federal income tax rates whenever it uses income tax rates in its calculations. However, most states impose their own income tax, and there may be instances when you want to include a donor’s state income tax rate in PGM’s computations. State income tax is deductible from federal income tax, so blending these two rates is not as simple as adding the two rates together. Fortunately, PGM offers a tool for computing the correct blended rate, along with online Help that explains how to use it.

Learn more...

Quick Tip: Reissuing 1099-R Forms
It happens almost every year. Just when you thought the process of preparing and sending 1099-R tax forms to your gift annuity beneficiaries was done, one or more forms are returned by the post office for address correction, or you learn that a beneficiary died in the tax year, which will require adjustments to the tax schedule.

Fortunately for GiftWrap clients, correcting and reissuing 1099-R forms is easy.

In GiftWrap, make the required address or tax schedule corrections. Then, from the Menu Bar, select 1099 Tax - Print 1099-R Forms. Enter tax year 2011 and any other necessary parameters. In the Person Key section, choose Key or List of Keys and enter the Person Key(s) of the people for whom you wish to reprint 1099-Rs. Select OK to print the replacement forms.

Refer to GiftWrap Help for additional information or contact Client Services for assistance at 888-474-2252 or support@pgcalc.com.

IRS Revises 2011 Reporting Requirements for Capital Gains Distributed by Charitable Gift Annuities
On December 16, 2011, the IRS provided new 1099-R Instructions for Annuitants that describe how to report 1099-R income on a Federal Income Tax return. Prior to then, these instructions stated that capital gains in Box 3 of the 1099-R should be reported on Form 1040 Schedule D line 13. The new instructions, in contrast, say the following:

If you are the beneficiary of a charitable gift annuity and receive a Form 1099-R showing an amount in box 3, report the Box 3 amount on Line 3 of Form 8949 that has Box C checked at the top. Enter “Form 1099-R” in column (a). Enter the Box 3 amount in column (e).

What this means is that the annuitant should complete a Form 8949 Part II (page 2) for Long-Term Capital Gains and Losses. The annuitant should then subtotal all amounts entered on Line 3 schedule of transactions to Line 4 on Form 8949, and then enter that subtotal on Line 10 of the Form 1040 Schedule D.

This instruction change does not affect taxes due. But as some annuitants may call with questions, we have added a Frequently Asked Questions (FAQ) document to our Knowledge Base that may help you respond.

New Michigan Tax Law Requires Withholding from Annuity Payments
The State of Michigan revised its Public Act 281 of 1967, amending section 206.703, effective January 1, 2012. This section relates to the withholding of Michigan income taxes from pension and annuity payments. After reviewing the changes, it appears that Michigan charities, and possibly some charities outside Michigan, are required to withhold state tax on the taxable portion of each gift annuity payment made to certain Michigan annuitants. We will continue to monitor this development and provide additional updates as needed.

You can find additional information about the new tax law via the following two links to the State of Michigan website.

2012 Michigan Pension Withholding Guide

Michigan Taxes - Frequently Asked Questions (see question 6 under “Changes to Pension Withholding and Who Will be Affected”)

Marketing Corner with Ann McPherson: The Four Steps to Branding
In an ideal world, brand strategy is driven from the top down, but what can you do when that hasn't happened? You might not have been part of the branding process, or your organization has not engaged in this level of marketing yet, or it has branded itself little by little. Despite the current situation, there are things you can do to connect your planned giving marketing to a comprehensive brand message. This article provides some basic steps on how branding applies to marketing planned gifts, regardless of the size of your organization or your budget. 

Learn more...

PG Calc “Far and Away” Mount Holyoke College’s Best Option for Gift Administration
Dan Cook, Assistant Treasurer at Mount Holyoke College, told us that the College has had an annuity program for over 30 years. “Initially we administered the program internally, but when that proved to be laborious, an outside vendor was contracted. In recent years the College began to consider outsourcing the annuity program to a more robust administrator who could provide a greater range of services. Additionally, we recognized the growing need for assistance in handling tax issues, which are continually changing and becoming increasingly complex.”  

“PG Calc was far and away our best option,” added Barbara Pare, Accounting Assistant. “Over the years, we have used PG Calc software regularly, and so it made perfect sense to hire the developers of that software, the foremost experts in planned giving administration. In the short time we have been with PG Calc, our program is running very smoothly, and we are extremely satisfied with their service. As we look ahead to registering in other states, we feel confident having the expertise of PG Calc behind us.”

Learn more about our Gift Administration Service

Learn more about Mount Holyoke College

Change in New York Gift Annuity Agreements
If your organization uses the annuity agreements contained within Planned Giving Manager (PGM) and has two representatives of your organization sign each completed agreement, a recent change by New York may affect you. The agreements within PGM currently use the word “Attest” above the second signatory line. However, the NY Department of Financial Services has indicated a desire to have the word removed, and to have just the two signatory lines, with the name and title of the second signatory appearing below the line, as it currently does for the first.

For organizations that have already submitted and received approval on agreements that contain “Attest,” there is no need to make a change. In fact, if your organization wanted to remove the word, it would need to submit new agreement forms to the Department for approval. On the other hand, organizations with two signatories that will be newly submitting agreements to New York for approval will need to do so without “Attest.” In the short term, you can remove “Attest” and add the name and title of the second signatory by editing the PGM agreements in Word. In the longer term, we plan to release an update of PGM this spring that will accommodate New York agreements that use either form of the second signatory line.

Join Us at the American Council on Gift Annuities (ACGA) Conference
Many of us are heading to San Francisco in April to attend the ACGA conference. Please remember to stop by and say “hello.” If you haven’t already registered, do so today!

Register

Upcoming Webinar: Meeting the Challenge of Qualifying Planned Giving Prospects, February 23
Most charities are pretty good at staying in contact with active planned gift prospects and moving them toward making a gift. However, many of these same charities fall short when it comes to qualifying new planned gift prospects to keep their active pipeline filled. This presentation will identify the many reasons charities fall short in this area and offer practical advice on how to overcome these impediments. Topics will include overcoming inertia and distractions, creating effective incentives for making planned giving donor qualification calls, and tips for improving calling skills. 

Date: February 23
Time: 1:00 – 2:30 pm ET
Presenter: Jeff Lydenberg

Register

Group Training Sessions Prior to ACGA Conference
We will be offering our Gift Planning with Planned Giving Manager and Gift Administration with GiftWrap group training sessions in San Francisco on April 16-17 in advance of the biennial ACGA Conference. We will also be offering our PGM training in Boston on April 30 and May 1. These classes provide a solid foundation for individuals who are new to planned giving or our software. They also serve to reinforce the skills and knowledge of experienced gift planners and administrators.

We’ve experienced a lot of interest in our training recently, and we’ve even had to close some classes because they were full. Please register as soon as possible to reserve your spot!

April 16 & 17*
Gift Planning with Planned Giving Manager
Introductory & Advanced
San Francisco, CA

April 16 & 17*
Gift Administration with GiftWrap
Basics & Reporting and Analysis
San Francisco, CA

April 30 & May 1
Gift Planning with Planned Giving Manager
Introductory & Advanced
Boston, MA

* Our San Francisco training sessions were previously published as taking place on April 17-18.

Learn more, register, or view our entire 2012 schedule

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