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You're considering a lifetime gift in partnership
with the Foundation > Your planning objectives are stable
future income and a high current income tax deduction >
Your preference is fixed income payments
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There is a version of the charitable gift annuity especially designed for younger donors. Called the deferred gift annuity, it makes fixed annual payments to you and/or another beneficiary for life, with payments commencing at a future date. Because of the deferral of income, we can offer a higher income rate for these annuities than for annuities whose income starts immediately. The deferral also provides a larger charitable income tax deduction than you could get from any other life-income gift plan.
These two features make the deferred gift annuity quite attractive to donors in high-earnings years who are concerned about securing both current tax deductions and additional sources of retirement income. Many donors establish a series of deferred annuities over several years, using funds they had already set aside for retirement saving. They set the commencement date for payments from these annuities to coincide with their or their spouse’s retirement.
The deferred gift annuity offers the same benefits of simplicity, security, and attractive income taxation that the regular gift annuity provides our donors:
- Your deferred annuity is a contract between
the Foundation and you, and your annuity payments are an obligation
backed by the assets of the benefiting Baptist cause;
- You secure a charitable income tax deduction based on the market value of the assets you contributed, minus the present value of the life-income interest you retained;
- No upfront capital gains tax is payable if
you fund your deferred gift annuity with appreciated assets; only
a portion of your gain is reportable over your annuity payments;
- Part of each annuity payment to you comes tax-free as the return of principal;
- A deferred annuity may be created with a gift
of $5,000 (cash or securities) / $10,000 (real estate) or more;
- The balance remaining in your deferred annuity after the death of the beneficiaries will be available for the use you designated when you created your gift annuity.
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Example
You've just turned 50, and your two children are now teenagers. You provide the bulk of your family's income and retirement savings. You and your husband are in the 35 percent tax bracket, and you have reached the maximum contribution limit for your group pension plan.
You are looking for ways to offset your
high taxable income, and for additional sources of retirement
income. You also want to make a gift of $50,000 to benefit
Christian education, but you're finding it hard to locate
the assets to make such a gift outright.
You decide that starting this year, you will create five deferred gift annuities of $10,000 each. Payments from all five annuities will commence when your husband turns 65, thirteen years from now, and will continue for the balance of your lives.
Because the deferral periods will get shorter each year, the five annuities will have different income rates and charitable deductions. Here are the income and tax benefits of the first deferred gift annuity:
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Donors
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Wife 50, Husband 52
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Click here
to calculate
the benefits
a deferred
gift annuity
would give
you.
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Amount contributed
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$10,000 cash
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Annuity rate
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13%
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Annual payment
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$1,300
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Payments commence
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2015
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Charitable deduction
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$2,318
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How Do You Create a Deferred Gift Annuity?
First, read the Disclosure of the assets managed by the Foundation. You should then consult with an attorney expert in the area of charitable gifts and estate planning. We will provide a draft of the deferred gift annuity agreement for review by you and your attorney.
Email us, complete the
personal illustration form, or call
us at 502-489-3533 so that we can assist you through every step
of the process.
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