The benefits of deferring charitable gift annuity income payments

Establishing a deferred payment charitable gift annuity is simple. You make a gift to The Associated of cash or appreciated securities and The Associated agrees to pay up to two individuals a fixed income beginning on a date you choose. You can set a firm date for payments to begin when you establish the annuity, or you can decide at a future date when you want the payments to begin. The longer you defer the start of payments the more annual income you will receive. Once the payments begin, they never fluctuate and will not be affected by changes in the economy or financial markets. The Associated will give you a simple agreement for your records. In return for your gift, you will get an income tax charitable deduction for a portion of your gift which will save you taxes if you itemize. Once you determine when your payments should start, The Associated will pay you income for the rest of your life (and the life of your spouse, should you choose); in almost every case, your annuity payments will be partially tax-free for some time.

Example

Janet Green, 55, works full time and expects to work for another 10 years or so. She owns CDs and a money market account, both of which pay about 2% interest each year.

Janet would like to make a significant gift to The Associated, but she wants to be sure she has adequate cash flow after she retires. She can dramatically increase her after-tax cash flow in her retirement by giving some of her CD or money market account funds to The Associated in exchange for a deferred gift annuity.

The table below illustrates the results if Janet gives $50,000 to create a deferred gift annuity that starts making payments in 10 years. In addition to earning a substantial income tax charitable deduction, Janet is able to significantly increase her cash flow from the $50,000 and will receive an immediate income tax deduction that may provide tax savings!

Lasting Gift to The Associated

While you will continue to receive income from the deferred charitable gift annuity for the remainder of your lifetime, after your lifetime, the remainder of the annuity will go to The Associated’s unrestricted endowment as a lasting legacy gift in your name.

The Associated’s professionals are ready to work with you and your advisors on the financial and charitable benefits of incorporating a deferred charitable gift annuity into your estate plan.