Regulation of Charitable Gift Annuities
Degree of Regulation:
Gift Annuities are exempted from state regulation under Montana Code Annotated, Sections 33-20-701 through 33-20-705.
- Years of operation - three years continuous operation (or be the successor or affiliate of an organization in operation for that period of time)
- Minimum assets - $300,000 in net worth or at least $100,000 in unrestricted cash, cash equivalents or marketable securities, exclusive of the assets funding the gift annuity agreement.
- Reserve fund - segregated reserve required.
- Reinsurance permitted - the above requirements are waived if the charity commercially reinsures its gift annuities by a licensed insurance company qualified to do business in Montana.
Actions Required for Exemption:
A charity must file a written notice with the Insurance Commissioner by the date on which it enters into its first qualified gift annuity agreement. The notice must be signed by an officer or director of the charity, identify the name and address of the charity, and certify that charity is a charitable organization and that its annuity agreements are qualified charitable gift annuities.
Disclosure and Agreement Content Requirements:
The gift annuity agreement must include the following state-specific disclosure language (in a separate paragraph, print size no smaller than that used generally in the gift annuity agreement):
"A qualified charitable gift annuity is not insurance under the laws of this state and is not subject to regulation by the Insurance Commissioner or protected by an insurance guaranty association."
In addition, for a Montana resident to qualify for a tax credit for a deferred annuity with a Montana charity, the agreement must state that the annuitant’s interest in the annuity cannot be assigned to the charity sooner than 5 years after the contribution has been made (except upon the death of the annuitant).
A charity must maintain a separate annuity fund holding at least 50% of the total initial value of all gift annuities in force upon acceptance of each gift annuity. If unable to meet these requirements, the charity must reinsure its annuity obligation with a commercial insurance company registered to do business in Montana.
An annual filing is required each year in which the charity issues qualified charitable gift annuities. Notice must be made on the state required form available online and signed by an officer or director of the organization. The organization must certify it is a charitable organization and that the annuities issued are qualified charitable gift annuities.
Submission Deadline - Annual filing deadline - March 1.
Enforcement may be made by demand letter. Failure of charity to comply with the notice requirements can result in fines of up to $1,000 for each qualified charitable gift annuity agreement issued until it does comply.
Links to State Regulations Pages:
Insurance Department Contact Information:
Michelle Scaccia, Examiner
Commissioner of Insurance
Montana Department of Insurance
840 Helena Avenue
Helena, MT 59604
Christina Goe, Staff Attorney