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Charitable Gift Annuities
The charitable gift annuity is a simple and
popular charitable life-payment plan. In exchange for a transfer
of cash, marketable securities or, in some circumstances, real estate,
the charity contractually guarantees to make specified annuity payments
to the donor and/or another beneficiary. The payout rate depends on the
age and number of beneficiaries.
Annual payments may begin immediately or, with a deferred-payment gift
annuity, at a set time in the future -- after retirement, for example.
This type of annuity is particularly attractive to donors in the 40- to
60-year age bracket who have a high current income, who can benefit from
a current tax deduction, and who are interested in augmenting potential
retirement income on a tax-favored basis.
Potential Benefits
The Development office can provide illustrations that will outline the
following benefits of charitable gift annuities for your situation:
- Receive income for life; perhaps even increase your income. If you
use a marketable asset that produces little or no income to fund the
annuity you may be able to increase your cash flow.
- Reduce or avoid capital gain taxes. If you use a highly appreciated
asset to fund the annuity you may be able to reduce your capital gain
tax liability.
- Receive an income tax deduction based upon the rate of return and
the length of time the annuity is expected to be in existence.
- Make a meaningful gift to Susquehanna University. Upon the
conclusion of the annuity Susquehanna will use the remaining principal
toward a purpose previously agreed upon by you and the University.
Many of these gift fund endowments that recognize your intentions in
perpetuity.
For more information about charitable gift annuities, please contact the
Susquehanna Office of Development at 800-353-7970 or 570-372-4356.
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A donor transfers $20,000 to her favorite charity in exchange for an
annuity payment of $1,500 a year for life. Of this amount, $701 will
be treated as a tax-free return of principal for the next sixteen
years (her life expectancy) and the remaining $799 will be treated as
ordinary income. Thereafter, the entire $1,500 will be treated as
ordinary income. In addition, the donor realizes a charitable
deduction of $8,852 that, in her 31% tax bracket, generates a net tax
savings of $2,744.
| One Life Annuity
| Two Life Annuity |
|---|
| Age |
Rate |
Age |
Rate |
| 60 |
5.7 % |
60 |
5.4 % |
| 65 |
6.0 % |
65 |
5.6 % |
| 70 |
6.5 % |
70 |
5.9 % |
| 75 |
7.1 % |
75 |
6.3 % |
| 80 |
8.0 % |
80 |
6.9 % |
| 85 |
9.5 % |
85 |
7.9 % |
*As recommended by the American Council on Gift Annuities. The above
Two Life Annuity rates assume the donors are the same age.
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