Charitable Gift Annuity
A Giving Partnership
How Does the Gift Annuity Work?
An individual or couple makes an irrevocable gift of cash, stocks, or bonds to Coral Ridge Presbyterian Church. The minimum amount gifted can be as low as $10,000 for all types of annuities. There is no limit on the maximum annuity amount to be gifted. After Coral Ridge receives the gift, the annuitant is paid an income ranging from 4.5 to 11.3 percent of the original gift, and the annuity can be for the life of one or two annuitants.
The amount of income received by the annuitant (or annuitants) is determined by these factors:
- The amount of the gift
- The age of the annuitant (or annuitants) at the time of the gift and when the income begins
- The type of annuity chosen
- The annuity rate
What are the Benefits of a Coral Ridge Gift Annuity?
Income: You (and/or another annuitant) will receive an assured income for life.
Tax Savings: A deduction on your federal income tax in the year you make the gift can be yours if you itemize your deductions. Additionally, part of the income received will be tax-free for the annuitant’s life expectancy.
Worry-Free Arrangement: Your annuity payments are yours for life without the worry of managing your investment. Coral Ridge has NEVER missed an annuity payment!
Competitive Annuity Rates: Gift annuity rates are very competitive with current rates available on other similar secure investments.
Unlimited Opportunity: The number of gift annuities you can establish is unlimited and is not affected by the value of the gift, so you may establish as many as you like.
Inner Satisfaction: The gift annuity offers many benefits, but the satisfaction of being a ministry partner with Coral Ridge is the most important. Your friendship and support are the foundation of Coral Ridge Presbyterian Church.
Benefits Now and for Eternity
“Should I meet my needs? Or should I give to work that supports others?” With a Coral Ridge Gift Annuity, you can do both in a partnership that meets the needs you face now as well as lends a helping hand to ministries that reach across the globe and into eternity.
What is a Coral Ridge Gift Annuity?
A gift annuity is a giving option which involves an arrangement between an individual or couple and Coral Ridge. Through a Coral Ridge Gift Annuity the individual or couple receives a fixed, lifetime income while providing valuable support for Coral Ridge. This allows a satisfying and beneficial relationship for each partner.
What Types of Gift Annuities Are Available to Me?
Single-Life Annuity pays income to one individual throughout the annuitant’s lifetime.
Joint and Survivor Annuity pays income to two annuitants simultaneously with one agreement and continues payments throughout the lifetime of the survivor.
Survivor Annuity pays income throughout the lifetime of an annuitant and then continues the payments to a second named annuitant.
Deferred Gift Annuity allows the donor to make a gift and defer income until retirement while still receiving a significant current income tax deduction. By delaying payments, the annuity rate and tax deductions are higher – making this an excellent retirement planning option or IRA alternative. (The deferral period must be a minimum of 1 year.
What Types of Annuity Rates and Income Tax Deductions Could I Expect to Receive?
The exact deduction can only be calculated when the annuity arrangement is established. Annuity Rates can be found at the American Council on Gift Annuities (ACGA) website.
Example of how a Charitable Gift Annuity could work for you
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Money Market
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Value:
Interest Rate: Annual Return: |
$100,000 1.00% $100 |
John (75) and Beth (70) Thompson have watched interest rates fluctuate for the past several years.They have not been satisfied with their money market fund currently earning at best 1.0%. They have looked at ways they could get back to the 5-6% rate of return they were used to, but they do not want to increase their market risk by investing in securities that would fluctuate in value.
For a number of years they have been actively involved in our church. In addition to supporting the church financially through regular tithing, John and Beth have enjoyed volunteering their time and getting to really know the staff and having a deeper understanding of our mission and how lives are being changed. One day while volunteering at the church, Beth had an opportunity to drop in to visit the Business Administrator and asked him if there was anything that they could do that could help the church and provide John and Beth with some additional income. Beth excitedly brought back a brochure on Charitable Gift Annuities to show John.
The Business Administrator explained that a Charitable Gift Annuity is a contract between the Thompsons and the church. The church will promise to pay John and Beth a fixed rate of return for life. In this case, the Thompsons were thinking of a $100,000 annuity. Based on the market conditions and other factors, such as their age, the rate* suggested by the American Council on Gift Annuities (ACGA) is 5.3%. This means that the church promises and guarantees to pay them $5,300 a year, regardless of changes in interest rates, for the rest of their lives. Because they are not using appreciated assets to fund the gift annuity, part of their payment will be considered tax-free return of principal for the Thompsons.
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Charitable Gift Annuity
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Amount:
Annual Income: Equivalent Rate of Return: Current year Tax Savings: |
$100,000 $5,300 8.2%** $10,016 |
Based on current calculations*, $3,752.40 of the $5,300 annual income will be free from income tax for 18.7 years. This means the Thompsons' effective annuity rate (what they would have to earn to equal it with fully taxable income) is 7.43%. Also, part of their $100,000 is a charitable gift and therefore the Thompsons get a charitable tax deduction in the current year of $28,617.00. That deduction could save John and Beth $10,016 this year (based on their 35% federal tax bracket). These numbers do not consider any state taxes that may be applicable.
John and Beth are happy with the increased income and the tax savings, and they are really excited about what their gift will mean to their charity.
Example assumes a 2.4 percent applicable federal rate (AFR) and a federal income tax bracket of 35%. State tax liability is not considered. The IRS allows the AFR from the current or one of the two previous months to be used. For a gift annuity, the lower the AFR, the higher the tax free portion of the annuity payments. A higher AFR increases the charitable tax deduction.
* Based on the current ACGA suggested rates effective 7/1/10.
** Adjusted upward because the tax-free portion of $3,816 makes the $5,300 annuity equivalent to $7,355 of taxable income for a beneficiary in the 35% income tax bracket and the $29,834 charitable tax deduction reduces the cost of the gift by $10,442.
Will a Gift Annuity Benefit Me?
The Coral Ridge Stewardship Department stands ready to assist you in your planning. Coral Ridge has Stewardship Representatives who can call on you in your home or office to discuss a Coral Ridge Gift Annuity or other estate planning needs. Your inquiry will place you under no obligation. For assistance please call us at 954.977.5150. or e-mail today!
