• Home
  • E-Booklets
  • Pay Less Tax
  • Privacy Policy
  • Cheatsheets
  • Contact Us
  • About us

Retirement Income

New Ways to Get More Retirement Income

  • Retirement Advisors
  • Retirement Insurance
  • Retirement Investing
  • Retirement Living
  • Retirement Planning

Charitable Annuities - a Better Way to Make Charitable Gifts

Posted on September 5, 2011 by bobrichards

Interested in making a sizable gift to charity but at the same time setting up a lifetime income for the remainder of your retirement years? That's what Charitable Annuities are all about. And the American Council on Gift Annuities[1] (ACGA) has been helping donors find charities for these gift annuities since 1927. Let's see how charitable annuities work.

First, charitable annuities (also called gift annuities) are contracts under which a charity, in return for a transfer of cash, marketable securities, real property or other assets from you, agrees to pay a fixed annuity to one or two individuals for their lifetimes.

The charitable annuities deduction

But clearly, if you're making a gift and expect an income tax deduction for it, you need to give more to the charity than they give back to you in the form of a lifetime payment. That's handled by the charity offering rates on charitable annuities that are lower than those offered by insurance companies to purchasers of commercial annuities. That difference leaves a significant portion of your contribution available for charitable purposes, i.e. the charitable gift.

The actual gift deduction is equal to the amount of the contribution less the present value of the annuity payments that will be made to the donors  during their lives. The annuity present value is determined using IRS tables regarding life expectancy, assumed earnings, the amount contributed, and the gift annuity rate.

The payment rates for charitable annuities recommended by the ACGA are in full compliance with the IRS and computed to produce an average gift to the organization at the expiration of the agreement of approximately 50% of the amount originally donated under the charitable annuity agreement.

Taxation of charitable annuities

If the gift annuity is funded with cash, part of the payments from the charity will be taxed as ordinary income and part will be tax-free. When charitable annuities are funded with appreciated securities or real estate owned more than one year, part of the payments will be taxed as ordinary income, part as capital gain, and part may be tax-free. The charity issues you a Form 1099-R specifying how much is taxed.

The size of payments from charitable annuities depends on:

  • The gift annuity rate offered by the charity
  • The value of the contribution.
  • The number of annuitants.
  • The age(s) of the annuitant(s).

Most charities follow rates recommended by the American Council on Gift Annuities.

So if you can afford to make a charitable donation and would like to count on lifetime payments offered by charitable annuities, your next step is to find a charity you'd like to donate to.

 


 

 

Everything You Don’t Know About How to Use Life Insurance to Make Money

  • Five ways that wealthy people use life insurance to retain and create wealth
  • How to convert an existing life insurance policy into more money than the insurance company valuation
  • Why you never want to be the owner of a policy that insures you
  • A huge and common mistake when selecting a life insurance beneficiary
  • They don’t talk about these “insider” strategies on CNBC or in Money magazine. Get the free guide to open up a new horizon of financial awareness.

    You might also like:

    • Retired and Stocks Losing Value
      Retired and Stocks Losing Value
    • How to Pay Lower Taxes on IRA Distributions
      How to Pay Lower Taxes on IRA Distributions
    • When Will the Stock Market Recover
      When Will the Stock Market Recover
    • Recession Can Be Good for Retirees - The Silver Lining of Recession
      Recession Can Be Good for Retirees - The Silver Lining of…
    • Bear Market - When Will It End?
      Bear Market - When Will It End?

    Filed Under: Estate Planning

    About bobrichards

    Bob Richards
    Editor | Involved in Various Marketing Positions within the Financial Services Industry

    Leave a Reply Cancel reply

    Your email address will not be published. Required fields are marked *

    Second place winner best retirement blog

    SH award winner SMALL (1)

    Not Enough Savings to Retire?
    Learn Six Ways to Earn Retirement Income (from home)

    You do not need special talents, skills, computer knowledge, etc. We show you multiple ways others are working a few hours a week to generate a comfortable retirement income.

    Download Free Copy

    Latest Posts

    Recession Can Be Good for Retirees - The Silver Lining of Recession

    Recession Can Be Good for Retirees - The Silver Lining of Recession

    Bear Market - When Will It End?

    Bear Market - When Will It End?

    When Will the Stock Market Recover

    When Will the Stock Market Recover

    How to Pay Lower Taxes on IRA Distributions

    How to Pay Lower Taxes on IRA Distributions

    Retired and Stocks Losing Value

    Retired and Stocks Losing Value

    Categories

    • 401K IRA Roth Withdrawals, Distributions, and Rollovers
    • Annuities for Income
    • Estate Planning
    • Retirement Advisors
    • Retirement Insurance
    • Retirement Investing
    • Retirement Living
    • Retirement Planning
    • Social Security
    • Supplemental Retirement Income
    • Tax Savings
    • Alternative Investments
    • E-Booklets
    • Pay Less Tax
    • Privacy Policy
    • Cheatsheets
    • Contact Us
    • Subscribe
    • Sitemap

    Recent Posts

    • Recession Can Be Good for Retirees - The Silver Lining of Recession
    • Bear Market - When Will It End?
    • When Will the Stock Market Recover
    • How to Pay Lower Taxes on IRA Distributions
    • Retired and Stocks Losing Value

    The Retirement Income Blog

    25A Crescent Drive #1508
    Pleasant Hill CA 94523
    T: 844-887-4131
    E: [email protected]

    © 2018 Retirement Income