Gift Annuity Rates
| Age |
Rates (Single Life) |
65
70
75
80
85
90 |
6.0%
6.5
7.1
8.0
9.5
11.3 |
Note: Rates are effective through June 30, 2008. Two-life rates are slightly lower than single-life rates.
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Creative Planning Opportunities with Charitable Gift Annuities
A CGA should never be established for financial and tax considerations alone. However, if you have a sincere desire to participate in our mission while enjoying splendid financial and tax benefits, the CGA is hard to beat.
As the plan continues in popularity, so does interest in exploring new ways to use it. So, let us look at three creative ways to use the charitable gift annuity in today’s ever-changing economy.
U.S. Savings Bonds: Energizing an Idle Asset
U.S. savings bonds are among the most widely held assets. Perhaps you, like many others, have them in your portfolio. If so, you may be surprised to discover how much the bonds you have accumulated over the years are worth today. It may also come as a shock to learn that some of them stopped earning interest years ago. Yet, if you cash in those bonds, you will have to pay significant income taxes on the accumulated interest.
Often, Ministry Friends ask if they can give these bonds to ADF and avoid the tax liability resulting from their redemption. Unfortunately, U.S. Treasury regulations severely restrict lifetime transfers of U.S. savings bonds. In brief, such bonds cannot be transferred directly to charitable organizations during your life. However, there is an indirect way to convert your savings bonds into a fixed income stream with a CGA.
Example: While cleaning up his office, Peter Barker found a box full of savings bonds he had accumulated over the years. After talking with his bank, he discovered the bonds were worth $30,000 but had stopped earning interest years ago. He also learned that if he cashed in the bonds, he would be taxed on about $20,000 of interest. Peter has been thinking about making a significant gift to the Alliance Defense Fund, and he wants to know if he can use the savings bonds to make his gift.
Peter learned through our staff that he could use a CGA to “re-energize” his bonds. First, he cashed in the bonds. He then used the proceeds to fund a charitable gift annuity with ADF. Under the arrangement, the gift annuity will pay Peter 8.0% (based on his age of 80) annually for life. Moreover, part of each payment will be tax-free until he reaches life expectancy.
Although Peter will be taxed on the bond’s accumulated interest at their redemption, his CGA entitles him to a charitable deduction of $14,249 in the year of his gift. This deduction will largely offset the tax liability from the bonds’ accumulated interest.
Peter has accomplished two main objectives: (1) making a significant charitable gift to the Alliance Defense Fund, and (2) converting an “idle asset” into an income stream while diminishing his tax liability.
Other Sections
· A Charitable Solution to Maturing CDs
· Want to Find Out More about How You Can Benefit?
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