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Minnewaska Home Development Foundation
The Gift Annuity
A Lifetime of Income . . . And Personal Satisfaction
Income for Life for You...Benefit for Future Generations
A charitable gift annuity allows you to make a gift, increase your income, and slice your tax bill
– all at the same time! We offer charitable gift annuities to those who desire to make a gift of
significance, while still retaining income from the gift property during their lives.
A charitable gift annuity is a contract under which you exchange a gift of cash or securities in
return for our promise to pay you a fixed income each year for the rest of your life (or for the lives of
two people). Your gift annuity offers five distinct advantages:
- Lifetime Income at attractive payout rates for one or two lives
- Significant Tax Savings since a large part of what you transfer is
a deductible charitable gift
- Partially Tax-Free Payout because a calculable part of your
annual payment is tax-free return of principal
- Reduction of Capital Gains Tax when you contribute securities
for a gift annuity, minimizing taxes on your "paper profit"
- Personal Satisfaction which comes from making a gift of lasting significance
You can choose...
...the length of the term of the annuity - one-life or two-life annuities;
...how frequently payments will be made – quarterly, semiannually or annually;
...how to fund your gift - cash or securities. Cash gifts provide the highest level of tax-exempt
payments. Gifts of securities maximize capital gains tax savings.
Fund Gift Annuities with CDs
Are your certificiates of deposit nearing maturity? Consider converting your CD funds
to a gift annuity.
Example: A woman, age 75, has $10,000 in a CD that will mature next month. She
can earn 2% interest on a new CD. This woman had been considering leaving her favorite charity
$10,000 in her will, but now has a better plan - a charitable gift annuity. In exchange for the
gift of $10,000 she will receive an annual income of $710 (of which $477 will be
completely tax-free), an income tax charitable deduction of $4,081, and the wonderful
feeling of knowing she has made a truly significant gift to her charity.
Please remember that while a charitable gift annuity is an irrevocable gift commitment,
it does offer truly outstanding tax and financial benefits.
Gifts of Securities Particularly Advantageous
A gift annuity funded with appreciated securities offers extraordinary advantages, as the
table below illustrates. If you give Minnewaska Home Development Foundation $10,000 worth of
stock in which you have a $3,500 long-term capital gain, you will avoid much of the tax that you
would owe were you to sell the stock outright. Suppose your charitable deduction amounts to 40%
of the $10,000 gift. You will completely escape tax on 40% of the $3,500 gain while the
remaining capital gain will be reported in prorated amounts over your life expectancy.
|
Benefits of a Charitable Gift Annuity for $10,000*
|
|
Age |
Recipient’s
Annual
Payment |
Tax-
Free
Portion |
Taxable
Income |
Charitable
Deduction |
Effective
Payout
Rate**
|
|
60 |
$570 |
$315 |
$255 |
$2,420 |
7.4% |
|
65 |
$600 |
$352 |
$248 |
$2,991 |
8.0% |
|
70 |
$650 |
$409 |
$241 |
$3,498 |
9.0% |
|
75 |
$710 |
$477 |
$233 |
$4,081 |
10.1% |
|
80 |
$800 |
$570 |
$230 |
$4,641 |
11.7% |
|
85 |
$950 |
$727 |
$223 |
$5,058 |
14.3% |
|
90 |
$1,130 |
$901 |
$229 |
$5,586 |
17.5%
|
|
* The $10,000 figure is merely a convenient
multiple. |
|
** The "effective" rate assumes a 28% federal income tax bracket in calculating the
donor’s charitable deduction tax savings and the benefits of the
tax-free income.
Deductions vary according to current interest rates.
|
What Income Will You Receive?
Gift annuity rates are determined by the age of the person (or persons) receiving the income
payments. The following chart shows that older donors receive higher rates of return.
Single-Life Gift Annuity Rates |
Age of
Donor |
Rate of
Return |
Age of
Donor |
Rate of
Return |
|
60 |
5.7% |
76 |
7.2% |
|
62 |
5.9% |
78 |
7.6% |
|
64 |
6.0% |
80 |
8.0% |
|
66 |
6.1% |
82 |
8.5% |
|
68 |
6.3% |
84 |
9.2% |
|
70 |
6.5% |
86 |
9.9% |
|
72 |
6.7% |
88 |
10.6% |
|
74 |
6.9% |
90 or over |
11.3%
|
For more information, please contact us.
Tina Gray-Siebers
Director of Resource Development
(320) 239-7135
e-mail:
tgray@mlh-healthcare.org
The information provides is not intended as legal, tax, or investment advice. Please consult
an attorney, tax or financial planning professional for questions specific to your financial
situation.
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