PG Calc Blog

BDQ #11: What Is the IRS Discount Rate, and Why Does It Change Every Single Month?

Craig Wruck — Tue, 12 May 2026 17:12:00 GMT

If you have ever run a calculation for a charitable gift annuity (CGA) or a charitable remainder trust (CRT), you have seen a specific number – usually somewhere between 4% and 6% – labeled as the “IRS Discount Rate” or the “Section 7520 Rate.” (Some planned giving connoisseurs like to call it the “CMFR.”) For many of us, this is just a mysterious number that suddenly appears to determine how much of an income tax deduction our donors get.

In simple terms, the 7520 rate is the IRS’s way of saying, “If the donor kept this money and invested it themselves, this is the interest rate we assume they would earn.” But where does this Discount Rate come from, and why is it so restless?

Respect for the Deceased: Your Final Obligations When a CGA Terminates at Death

Kara Morin — Wed, 15 Apr 2026 14:15:08 GMT

While some charitable gift annuities (CGAs) are voluntarily terminated by annuitants, either for a charitable deduction or a lump sum payout, the vast majority of CGAs terminate with the death of the final annuitant. When this happens, the charity must fulfill their final contractual obligation to the CGA’s donor, which is to distribute the residuum to the charitable purpose. Here’s our recommended list of steps that should be completed before releasing the gift.

Make This Your Last Year for PIF K-1s

Kara Morin — Thu, 12 Mar 2026 14:23:00 GMT

Each year at this time, charities with pooled income fund (PIF) programs start receiving calls and emails from PIF beneficiaries who are agitated by the perceived “lateness” of their Form K-1 (by law, PIF K-1s are not due until April 15). Many beneficiaries receive fairly modest PIF incomes, and it is not uncommon for a PIF beneficiary to be waiting on a K-1 only to learn that their reportable annual income is less than $100. In the Venn diagram of PIF beneficiaries who receive scant annual income and also get angry about the perceived K-1 delay, there is an opportunity to present a voluntary severance from the PIF.

The RMD: Timing Is Everything

abrown@pgcalc.com (Amy M. Brown) — Tue, 17 Feb 2026 14:30:17 GMT

Does the timing of the first RMD for a 73-year-old matter?

A question from a client came up about a donor who was turning 73 in the calendar year using their Individual Retirement Account (IRA) to fund a charitable gift. Would a qualified charitable distribution (QCD) taken in the year the donor turns 73 but before the donor’s actual 73rd birthday count toward the Required Minimum Distribution (RMD) for that year? For instance, can a donor turning 73 on December 31st establish a QCD charitable gift annuity (CGA) on December 1st and still have it count toward their RMD?

Plan Your Postmark: Operational Changes at USPS Can Affect Gift Dates

abrown@pgcalc.com (Amy M. Brown) — Fri, 13 Feb 2026 15:27:55 GMT

In 2025 the US Post Office made a quiet shift in its operations that resulted in some gifts handed to the US Post Office on December 30th and 31st being postmarked in January. Donors and charities should be aware of this change, as the mailbox rule to establish a gift date for a mailed check relates to when the postmark is applied not when the US Post Office came in possession of the mail.

Mail deposited in mailboxes, retail locations, and US Post Offices is sent to central processing facilities for sorting. Even though the US Postal Service (USPS) has possession of the mail, the postmark is not usually applied until the mail reaches a processing facility. In 2025 the US Post Office made changes to its transportation operations which no longer guarantee that mail deposited in a mailbox or handed to a postal worker at a retail post office will arrive at a processing facility on the same day. This means mail that is simply dropped off in a mailbox or US Post Office may not be postmarked for a day or two until it reaches the processing facility. As a result, the date on the postmark applied at a processing facility will not necessarily match the date on which a letter was collected by a letter carrier, handed over the counter to a post office employee, or dropped in a mailbox.

New Jersey Is Inflexible on Flexible Gift Annuities

Kara Morin — Wed, 14 Jan 2026 15:00:23 GMT

New Jersey is requiring actuarial verification of state reserve reports as part of a charity’s gift annuity annual reporting if the charity offers flexible gift annuities (FGAs). If your charity has a pending application, you will need to add an actuarial verification of your New Jersey reserve calculations if you offer FGAs. Charities that are already registered in New Jersey will need actuarial verification of their state reserve report as part of their annual filings if they offer FGAs.

Talking to Your Donors about the OBBBA Changes: Turning Tax Changes into Gift Opportunities

Craig Wruck — Tue, 13 Jan 2026 15:23:00 GMT

As we approach tax season, many of your donors may be confused when they hear whispers about the One Big Beautiful Bill Act (OBBBA) and how it might impact their charitable giving. While tax law shifts can feel daunting, these changes aren’t reasons for your donors to stop giving. In fact, a door has opened to engage donors in conversations about how to give more strategically … and give more.

Gifts of Silver and Gold

Jeffrey Frye — Mon, 15 Dec 2025 15:39:29 GMT

Historically, most charitable gift annuities (CGAs) have been funded by cash donations. In some cases, however, donors prefer to use appreciated securities to establish their CGAs. This alternative approach certainly makes sense from a financial and tax perspective. Planned giving donors tend to have more accumulated wealth in appreciated stocks than in cash reserves. In addition, using appreciated securities to fund a gift annuity generally allows the donor to lessen the amount of realized capital gains for which they will be taxed. And in most cases, when the annuitant is the donor (or when the first of two annuitants is the donor), the amount of taxable capital gain may be spread ratably over the donor’s life expectancy. This means the donor pays tax on a lesser amount of capital gains AND that those taxable gains are divided up and reported in many smaller amounts over time.

But what happens when the donor wishes to establish a gift annuity using holdings of silver or gold? Are the benefits similar to using appreciated securities to fund CGAs? Turns out there are some similarities, but there are also significant differences.

Don’t Run FASB Liability Calculations for Lead Trusts and Perpetual Charitable Trusts

Jeffrey Frye — Mon, 17 Nov 2025 15:14:59 GMT

PG Calc provides software for calculating the estimated Financial Accounting Standards Board (FASB) liabilities for life income gifts. We also offer a service whereby we will run the calculations for the charity. These estimates of future payment obligations make sense for life income gift arrangements – charitable gift annuities (CGAs), charitable remainder trusts (CRTs), and pooled income funds (PIFs). For each of these gift vehicles, the charity has an obligation to make payments either for a number of years or for a person’s remaining lifetime. However, we also see charities that record future payments from lead trusts and perpetual trusts as obligations of the charity. Does this make sense? Let’s explore this question.

Alternative Endings: Early Terminations of Split-Interest Gifts

Jeffrey Frye — Tue, 14 Oct 2025 14:04:51 GMT

Split-interest gifts are legal arrangements through which individuals contribute something of value to a nonprofit organization (frequently cash, marketable securities, or real estate), and receive, in return, both a charitable income tax deduction and a benefit of some monetary value. The majority of split-interest gifts are so-called “life income gifts,” whereby the donors receive certain amounts of income for the rest of their lives. The most popular examples are charitable gift annuities and charitable remainder trusts. Participations in pooled income funds have fallen out of favor in recent years.

Another popular split-interest gift – one that is NOT a life income gift – is the retained life estate. With this gift vehicle, the donor contributes real estate – typically, a residence – and receives two things in return. First, an income tax deduction, and second, the right to live in the property for the rest of his or her life. While the life estate does not represent income, it has a value that can be computed. The value of the life estate, for the most part, is based on the age of the donor and the current value of the property.

In these gift examples, the donors are making charitable gifts as portions of their split-interest gifts, and these transactions are irrevocable. The donors cannot undo the gifts – they cannot take the cash or securities or real estate back, even if they change their minds later. But are the donors of these gift vehicles locked into the legal arrangements for the rest of their lives? Is there no way to “get out” of these binding contracts and agreements?