Annuities

The charitable gift annuity has been used by many who wish to make meaningful gifts to charitable organizations or institutions, but want to also provide for their own future financial well-being.

A gift annuity makes it possible to transfer cash or marketable securities such as stocks or bonds (including mutual funds) to an organization or institution you want to benefit. In exchange, you and/or someone else you designate will receive fixed payments for life.

Why a Gift Annuity?

  • The gift annuity serves two purposes: giving and receiving.
  • Example: Suppose you are age 75 and want to make a substantial gift.
    You decide to give $10,000 to a nonprofit recipient and receive annual payments of 7.7%
    for as long as you live. Here is a summary of the results:
  1. You transfer $10,000 for a gift annuity agreement.
  2. You are permitted to deduct over $5,000 as a charitable gift in the year the gift is made. (Note: If this is more than you can deduct in the year of the gift, you can carry over any excess deduction into the five succeeding tax years.) The exact deductible amount may vary from month to month.
  3. You will receive $770 each year for as long as you live. When you file your federal income tax each year, you report only $372 for approximately the next 12 years. During that time, $398 of each payment does not have to be reported as income. Afterward, the entire payment is taxable. (Note: The length of time that payments are partially tax-free depends upon your age when the gift annuity is created.)
  4. At death, the charitable recipient's obligation to make payments ends, yet your gift continues to be used in the work you wished to further.

A "Double-Duty" Annuity

  • Let's assume that a married couple, ages 75 and 79, wish to make a gift as part of their financial plans. If they give $10,000 for a gift annuity agreement, under current rates the annual payments will be $700 (7% x $10,000). They will be made for as long as either lives.
  • When the couple files their federal joint income tax return, the tables provided by the IRS show that their charitable income tax deduction in the year of the gift is approximately $4,600. (Again, this amount may vary.)
  • This could result in significant tax savings, which could be invested for additional income. As in the case of an annuity for one person's life, a portion of each year's payment is tax-free for a number of years.

Gift Annuity Rates

  • Payment rates (used in examples) are reviewed periodically and thus are subject to change. Contact us for current rate information. Once you have given a gift annuity, the rate for that particular annuity will not change.