Gift Range: $10,000 or more
This type of gift might appeal to you if you want to support the Lewis County Historical Society, are 40 to 60 years old, have a high income, need to benefit now from a current tax deduction, and are interested in augmenting potential retirement income.
The deferred-payment gift annuity involves the current transfer of cash or marketable securities in exchange for which the Historical Society agrees to pay the donor an annuity starting at a future date—usually at the donor’s retirement. The gift can consist of a single transfer, a series of transfers, or periodic transfers to the plan in high-income years.
You realize an immediate charitable deduction for the gift portion of each transfer to establish a deferred gift annuity. A portion of each annuity payment, when the payments begin, will be a tax-free return of principal over the life expectancy of the annuitant. When appreciated long-term capital-gain securities are transferred, any reportable capital gain is spread out over the donor’s life expectancy.
Example: A married couple, John and Mary, both 55, wish to supplement their retirement income with deferred-payment gift annuities. After consulting with their own legal and financial advisors (and the Historical Society), they decide to contribute $25,000 each year for the next ten years to the Lewis County Historical Society’s gift-annuity program.
The tax and financial benefits of this arrangement to John and Mary are as follows:
- Under the deferred-gift arrangement, John and Mary are entitled to a charitable deduction for each annual contribution. While the deductions vary from year to year, the total charitable deduction over the ten-year period—based on current IRS mortality and interest assumptions—will be approximately $78,229 (about 31.2% of the amount they contribute over the ten-year period).
- Beginning in the year they both attain the age of 65, when retirement income becomes important, John and Mary will receive $13,775 each year from their well-planned annuities. In addition, a portion of those payments will be excludable from their taxable income for their life expectancy.
- Unlike a qualified retirement plan, there are no upper limits to their contributions or other restrictive requirements on the design of the plan.
How It Works
- Transfer cash or other property to the Lewis County Historical Society
- The Historical Society agrees to make payments for the life of one and up to two annuitants
- The balance of the transfer inure to the Historical Society
- Payments for life that are favorably taxed
- When gift is funded with cash part of the payment will be tax-free
- When gift is funded with appreciated property, part will be taxed as capital gain, part will be tax-free, and part will be taxed as ordinary income
- Federal income-tax deduction for a portion of your gift
Gift will provide generous support for the Historical Society