Of all the gifts that pay you back, the charitable gift annuity is the simplest, most affordable, and most popular. You make a gift to Stevenson University and in return, we agree to make fixed payments to you for life. The gift agreement is a simple contract between you and Stevenson University. Your payments become one of our general obligations, fully backed by all our assets, and will not fluctuate.
When the contract ends, we apply the balance of the gift annuity to the program you designated when you made your gift.
Gift annuities offer attractive tax benefits:
- You will receive a federal income tax deduction for a portion of your gift, based on the full value of the assets you contribute minus the present value of the life-income interest you retain.
- If you fund your charitable gift annuity with appreciated securities, naming yourself as beneficiary, no capital gains tax is due on the transfer. Only a portion of your capital gain will be reportable, and the tax will be spread over your annuity payments.
- Part of each annuity payment will be treated as tax-free return of your principal. This effectively increases the yield from your annuity over your life expectancy.
Your gift annuity can start payments once you have made your contribution (an immediate payment gift annuity), or payments can begin at a later date selected by you (a deferred payment gift annuity). Deferral entitles you to a higher annuity rate and generates a larger charitable deduction.
Most Common Uses
- Supplement Income in Retirement — If you have already retired and want to want to increase the yield from low dividend stocks or other interest-bearing assets, a charitable gift annuity can provide you with guaranteed fixed income for life at a rate higher than most dividends, CDs or savings accounts. Best of all, when the annuity matures, you support our mission.
- Income to Aging Parents — Many members of the “sandwich” generation face the difficult task of caring for children at the same time they are providing help and support for aging parents. Frequently these parents do not want to take money from their children, causing them financial hardship. A charitable gift annuity with us can provide payments or direct deposit to your aging parent or parents now and a gift to us later, all while providing you with both peace of mind and an income tax deduction.
- A charitable gift annuity at Stevenson University can be created with a gift of $10,000 or more.
- Gift annuities bring the benefits of a life-income gift into reach for many donors.
- Your gift annuity can make payments to a maximum of two people.
- Gift annuity rates are partly determined by the age of the beneficiary.
- Younger donors may find planning benefits in a deferred gift annuity.
- Do you want to control the start date of payments? Consider a flexible gift annuity.
How are the annuity payments secured?
A gift annuity contract becomes a legal financial obligation of SU and is backed by all of our unrestricted assets.
Is it better to give cash or appreciated securities for my gift annuity?
Both have distinct advantages. A gift of cash will produce a larger tax-free portion of the annuity. A gift of stock can increase your income because of reduced capital gains cost. Both assets produce an equal annuity rate and charitable income tax deduction.
Can I include my children as income beneficiaries of my gift annuity?
A charitable gift annuity can only be set up for one or two lives. This is typically a husband and wife, but it could be two siblings or two friends, etc. Beneficiaries must be at least 65 at the time of the gift. For more flexible beneficiary choices, you could consider a charitable remainder unitrust.
What’s the difference between a commercial annuity and a charitable gift annuity?
A commercial annuity, typically sold by banks and life insurance companies, will provide the owner with fixed or variable income based on commercial rates of return. These plans establish their annuity payments based on the assumption that all of the assets in the plan will be used up by the end of the income beneficiaries’ lives.
A charitable gift annuity is part guaranteed annuity and part charitable contribution. The donor receives a partial income tax deduction based on the assumed value of the portion of the gift the organization will ultimately receive. A gift annuity establishes its payments on the assumption that there will be something left for the organization at the end of the contract. Often annuity rates for gift annuities cannot compete with the annuity rates of a commercial annuity because of the charitable component in the contracts. But then, there are fewer tax benefits with a commercial annuity.
Can I defer my annuity payments?
Yes, you can make a gift now for an annuity contract that will defer your payments to a future date that you decide, typically sometime in your retirement years when you will need the income. In this sense, a deferred payment gift annuity can serve as a type of tax-deferred savings plan that will provide you with guaranteed income in the future.
Is it possible to control the start date of payments?
Yes. Consider a flexible gift annuity.
The tax advantage stems from the fact that most retirement plans (other than RothIRAs) are subject to income taxes—and possibly estate taxes—if left to an individual beneficiary; however, a charity that is named as the beneficiary does not pay income or estate taxes on the distribution.
IRA Charitable Rollovers
Due to recently enacted legislation, you may also be able to make a gift to charity with a distribution from your Individual Retirement Account (IRA), and take advantage of tax savings. Under The Protecting Americans from Tax Hikes Act of 2015, Americans over the age of 70½ can distribute up to $100,000 in a calendar year from an IRA to Stanford or other charities, tax-free. This distribution to charity can be a significant benefit for IRA owners who are required each year to take minimum required distributions, which are included in their gross income for income tax purposes.
If an IRA owner directs the IRA plan administrator to distribute any amount up to $100,000 to charity, the distribution counts toward the owner’s minimum required distribution, but is not included in his or her income for income tax purposes. Although the IRA owner is not entitled to a charitable deduction for the distribution, the distribution benefits charity. This option is known as the “IRA charitable rollover.”
Here’s How It Works:
- You must be 70½ or older at the time of distribution.
- You may distribute any amount up to $100,000 in a calendar year to charity, as long it is completed by December 31 of the year in which you intend to make the charitable distribution.
- Your IRA administrator must make the distribution directly to the charity, or you may write a check payable to the charity from your IRA checkbook.
If you make a gift to Stevenson from your IRA, please include written instructions on how you would like to designate your gift by making a note on your IRA check. You can also call 443.334.2269 or email firstname.lastname@example.org with your gift designation.
Gifts from Your Will or Trust
How It Works
- Include a gift to Stevenson University in your will or trust.
- Make your bequest unrestricted or direct it to a specific purpose.
- Indicate a specific amount or a percentage of the balance remaining in your estate or trust.
- Your assets remain in your control during your lifetime.
- You can modify your gift to address changing circumstances.
- You can direct your gift to a particular purpose (be sure to check with us to make sure your gift can be used as intended).
- Under current tax law, there is no upper limit on the estate tax deduction for your charitable bequests.
Please let us know if you have already included Stevenson University in your estate plan or if you are considering doing so. We would love to hear from you. Call Robert Turner @ 443.334.2269 or email email@example.com.
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