Sec. 7520(c)(2) of the Internal Revenue Code requires the updating of the actuarial tables every 10 years. In August 2020, the National Center for Health Statistics and the Centers for Disease Control and Prevention released updated tables for the 2009-2011 period. This report shows the continual improvement in longevity.
Almost 6,300 more people out of 100,000 survive to age 80 than under the current tables. Almost 7,000 more people out of 100,000 survive to age 85 than under the current tables.
There has been a dramatic increase from 22.5% to 28% in the probability of survival to 90 from age 65.
And remember, the new tables, once finalized, will be 10 years out of date thereby understating longevity.
For life income gifts with charitable remainder beneficiaries, such as gift annuities, remainder trusts and life estates, the charitable deduction will be smaller than under the current tables. For charitable lead trusts running for a life or lives, the charitable deduction will be greater and the taxable gift of the noncharitable remainder beneficiaries smaller.
Although the tables are still required to be incorporated into proposed regulations yet to be issued, history tells us they are likely to be similar to the official tables. This first peek at the longevity tables should prompt the charity to assess whether or not to raise the minimum age for a charitable gift annuitant.
Sharpe Group will continue to post helpful information for you here on our blog and on our social media sites. If this blog was shared with you and you wish to sign up, you can do so at www.SHARPEnet.com/blog.
We welcome questions you’d like us to address. Email us at info@SHARPEnet.com and we’ll share your question and our thoughts in this blog and on social media.