Deferred Gift Annuities
A deferred gift annuity, like a charitable gift annuity, provides a fixed income for life in exchange for a gift to the Garden. With a deferred gift annuity, however, payments begin at a specified future date. This can be an attractive option for younger donors, who may wish to supplement future income. Donors of deferred gift annuities will receive an income tax deduction for the year in which the gift is made, and when payments begin, a portion of each payment will be tax-free. Deferred gift annuities can be established with cash or securities.
Case study: Establishing a deferred gift annuity
Dave and Donna Barns, ages 60 and 63, don’t plan to retire for several years. Their father, Don Barns, is looking for a way to contribute to the Garden, while ensuring a comfortable retirement for his children. The family decides to establish a five-year deferred gift annuity by donating appreciated stock worth $250,000, which Don Barns originally purchased for $100,000. In accordance with the senior Barns’ wishes, the gift is targeted to an endowed research position.
Don Barns has—
- taken an immediate charitable income tax deduction of $61,277;
- secured a guaranteed future income for his children;
- avoided capital gains taxes; and
- received a significant income tax deduction.
As for his children: Dave and Donna Barns will begin receiving an annual income of $16,000, starting in five years.
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