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Washington

Regulation of Charitable Gift Annuities

Degree of Regulation:

Issuance of charitable gift annuities is regulated under Revised Code of Washington Chapter 48.38.

In order to issue gift annuities in the state, a charity must meet the following regulatory requirements:

  • have been in continuous operation for three years
  • have $500,000 in unrestricted net assets
  • obtain a certificate of exemption from the Office of Insurance Commissioner.
  • maintain gift annuity reserves, invested in accordance with the prudent investor standard
  • submit an annual filing to the state
  • register as a charitable organization with the Washington Secretary of State (unless exempt from such registration)

Actions Required for Exemption:

Application for a certificate of exemption is to be made to the Washington State Insurance Department prior to issuance of any gift annuity in the state.

There is an application fee of $25.

Disclosure and Agreement Content Requirements:

The annuity agreement must include the following:

  • The value of the property to be transferred
  • The amount of the periodic annuity benefits to be paid
  • The manner in which and the intervals at which payment is to be made
  • The age of the annuitant (date of birth is sufficient)
    The reasonable commensurate value. (IRS present value is acceptable)
  • A misstatement of age provision (providing for corrective action if the age of the annuitant is wrong)
  • Washington law must govern the agreement
  • The donor must sign the agreement or an application form that is attached to the agreement
  • Sequential numbering in the upper right corner
  • Form number in the lower left corner

Reserve Requirements:

The segregated fund must maintain assets at least equal to the sum of a charity’s reserves on its outstanding gift annuity agreements, plus a 10% surplus. The reserves are to be calculated in accordance with prescribed mortality tables and discount rates. A deduction in reserves may be made for any portion of the annuity risk that is reinsured by an authorized life insurance company licensed in both the charity’s state of domicile and the state of issuance.The segregated reserve fund must be invested in the same manner expected by persons of reasonable prudence.

Annual Reporting:

An annual report of the reserve fund is due 60 days after the end of a charity's fiscal year, and must include a certification by an actuary.  A charity must also file annually a copy of its audited financial statement within 120 days of its fiscal year end (unless it has requested and received an extension) and a copy of Form 990 (if applicable) within 15 days of having filed it with the IRS.

The annual report fee, due by March 1 for all registered charities, is $25, plus $5 for each newly issued Washington annuity.

Compliance/Enforcement:

Failure to comply with any of the statutory requirements may result in the suspension or revocation of the certificate of exemption or a fine of up to $10,000.  Late filing of the annual report form will generally result in a fine of $500.00.   A charity that issues a gift annuity without first obtaining a permit will be assessed a fine, with the amount influenced by the number of annuities, the number of years over which they were issued, and how recent the issuance.

Links to State Regulations:

Code of Washington Sec. 48.38
Annual Report Information

Washington Insurance Department Contact Information:

For Registration: Susan Baker or Gayle Pasero, CPCU
Office of the Insurance Commissioner
P.O. Box 40259
Olympia, WA 98504-0259
Susan - (360) 725-7232 or Gayle - (360) 725-7210
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For Financial Filings:  Steve Drutz (Senior Financial Analyst)
Office of the Insurance Commissioner
P.O. Box 40259
Olympia, WA 98504-0259
(360) 725-7205
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