Gift Annuity Reserves - Non-State Method

Gift Annuity Reserves - Custom Method

The Gift Annuity Reserve report summarizes the calculated reserve amount required to cover payment obligations for each of the gift annuities included in the report. You can save the Reserve amount computed for each gift in the gift's Reserve Amount field if you wish.

This report is designed to let you calculate and analyze the reserve requirement for a specific group of gift annuities or for your entire gift annuity program. Unlike the state method, the custom method gives you a choice of interest rates and mortality tables on which to base your reserve calculations. You can, for example, base calculations on custom mortality table information entered under Setup/Custom State Reserve Mortality Table.

1. Click Liabilities > Gift Annuity Reserves - Custom Method in the Menu Bar.

2. Enter the calculation, selection, and sorting information required to produce the report you desire. Enter a custom filter to select a specific group of gift annuities. There is help available on each field.

See Notes below for instructions on computing reserves for Arkansas using the "IRS Method."

3. Click OK to view the report. If you see an error log, see Notes below, especially State interest rate not found.

4. Do the following, as needed:

5. Click $image\closebox.gif$ to close the report.

6. Do one of the following:

Click "Save New Values in Each Gift Record" to save the reserve amount computed for each gift in the report in the gift's Reserve Amount field, and then click OK.

The Reserve Amount field is displayed on the Details tab in the gift's Gift Information window. The valuation date for the liabilities will be saved in the Reserve Date field for each gift, as well.
Click "Save New Values in Each Gift Record and in the Historical Value Table" to save the reserve amount in both the gift's Reserve Amount field and as a historical reserve value, and then click.

The Reserve Amount field is displayed on the Details tab in the gift's Gift Information window. The valuation date for the liabilities will be saved in the Reserve Date field for each gift, as well.
Click "Do not save new Reserve amounts" and then OK, or click Cancel if you do not wish to save the reserve amounts or valuation date from the report.

7. Click $image\closebox.gif$ to close the Gift Annuity Reserves page.

Notes:

· Gifts included in calculations
For a gift to be included in the calculations, the following must be true in addition to any selection criteria entered:

Gift Date is less than or equal to Valuation Date

Gift Status is Currrent or Gift Status is Finished/Severed and Account Closed Date is greater than or equal to Valuation Date

Person Status of at least one associated person is Current/Missing or Person Status of at least one associated person is Deceased and Date of Death is greater than Valuation Date

· Reserves don't match IRS investment in contract calculations
You cannot use the Gift Annuity Reserves report to match IRS investment in contract calculations. If you wish GiftWrap calculations to match the IRS calculation of each annuitant investment in contract, run the FASB Liabilities report and choose 2000CM as the mortality table and use each gift IRS discount rate as the interest rate.

· Computing Arkansas reserves using the "IRS method"
As of 2007, Arkansas accepts reserves computed using one of three ways. The easiest method to produce follows the so-called "IRS method." To apply the IRS method in Gift Annuity Reserves - Custom Method, select the current mortality table for computing deductions for planned gifts as the Mortality Table and the IRS discount rate for the month of reserve valuation as the Interest Rate.

For example, for a reserve valuation performed as of December 31, 2009, you would choose 2000CM as the mortality table, then choose Use One Rate of Return under Interest Rates and enter 5.0 as the interest rate (assuming the IRS discount rate for that month was 5.0%).

See Arkansas Reserve Calculations in Gift Annuity Reserve Calculations Explained for details on the options for complying with Arkansas reserves requirements.

· State interest rate not found
If you see an error window that lists "No <year> state interest rate found . . ." for one or more gifts, you may need to update your State Reserve Percentages table with interest rates that apply to your most recent gifts.

State reserve percentages for the year usually become available in the late summer or early fall of each year. Prior to then, you can use the previous year's rates to compute reserves for gifts made in the current year. GiftWrap makes this choice for you automatically if rates for the previous year are available in the State Reserve Percentages table. The error message will indicate whether GiftWrap has the previous year's rate to use.

For on-demand clients, PG Calc will keep this table current with the latest state rates. For enterprise clients, PG Calc will provide instructions on how to update this table whenever new state rates become available.

· Error log
If you see an error log, fix the errors it identifies, then run Gift Annuity Reserves - Custom Method again.

You can print the error log or save the log in a file that you can print or review later. Click Continue and go to the next step in the procedure.