| Gifts that Help Supplement Your Income |
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by Bryon Swanson The federal government has created regulations and laws that reward people for making charitable gifts to the ministries and institutions that have touched their lives. The charitable gift annuity is a recognized planned giving technique designed to advance the work of a ministry like Back to the Bible while providing simple benefits to the donor--namely guaranteed payments for life and a gift portion that qualifies as a charitable deduction for those who itemize. For the young, those at midlife and beyond, the gift annuity can be of real help. Andy has been out of college for a few years and is getting settled into his career. He knows that now is the time to start thinking about and planning for retirement. He faithfully puts a portion of each check into mutual funds through his work retirement plan. But Andy feels a little bothered by the fact that the money will not do him or anyone else any good until retirement--a time that seems so far into the future. He considered a deferred payment gift annuity and saw how it could benefit the Lord's work and provide a supplement for his future needs. Mildred retired about seven years ago. She regularly makes gifts of her income to her church and to favorite ministries. But one day, Mildred called wondering if something different could be done. She had a certificate of deposit maturing in a few weeks. She really wanted to give at least a part of it, but felt she could not do without the income the certificate generates. We discussed the charitable gift annuity as a possibility. Mildred thought it sounded like a wonderful idea.
The gift annuity is an irrevocable plan that makes a tax-deductible gift to the issuing organization while making lifetime payments to the donor. At age 72, Mildred qualifies for a gift annuity rate of 7.9%. The $10,000 she was considering as a deposit would produce $790 in payments each year for the rest of her life. A part of the annual payment is tax-free. In the year of transfer, the gift annuity produces a charitable gift in the amount of $4,505 that can be used as an itemized deduction on her Federal Income Tax Return. Andy wondered what a deposit of $1,000 could do for ministry and for him through a deferred payment gift annuity. At 28, with the first payment scheduled to begin on his 65th birthday, he qualifies for a gift annuity rate of 58.7%. The agreement creates a gift of $595 that Andy can claim on his 1998 federal income tax return (since he itemizes). When he reaches age 65, and for each of the remaining years of his life, the gift annuity will pay him $587 a year. Both Mildred and Andy liked the idea. They each had the satisfaction of knowing that a significant gift would be made--larger than either ever imagined. Mildred liked the idea that the plan would free her from managing a certificate of deposit each time it matured. Andy liked the idea that his money would make an impact on ministry now while providing a supplemental source of payments for his future. Specific rate and tax information is available upon request. Depending on your need, one or two-life agreements are available. Depending on the issuing organization, a gift annuity can be entered with as little as $500. Cash or securities may be used as the deposit with some benefits in the recognition of capital gains when appreciated securities are used. Please request specific rate and tax information to see how it can work for you. |
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