As we’ve previously shared, the New York Department of Financial Services (NYDFS) publishes maximum allowable payout rates which, in the past, had been lower in some cases than ACGA suggested rates. The ACGA worked with the NYDFS and legislation was passed in advance of the change to define how the suggested rates would be calculated.  

In general, the NYDFS suggested maximum rates are now higher than ACGA suggested rates. Our regular subscribers of this newsletter will remember that the NYDFS does not publish joint life rates and therefore, charities may use ACGA suggested rates for joint life rates (as ACGA joint life rates are based on the single life rates). 

The new law in NY only changed the methodology for the calculation of maximum allowable payout rates as published by NYDFS.  The legislation did not change the reserve methodology.  NYDFS continues to publish quarterly discounting rates for the purposes of calculating required reserves.  The discount rates for 4Q2024 vary from 4.25% to 4.75%. When adding on the surplus reserve (26.5%) for the NYDFS filings, depending on the life expectancy of the gift, some gifts may have reserve requirements close to the market value of the gifts. The gifts will hurdle the IRS mandated 10% minimums as the IRS uses a less conservative mortality table, but charities should be aware of this particular wrinkle in NY law.