Planning for the Future

 

Gift Annuity Rates to Increase

Starting next month, gift annuity rates recommended by the American Council on Gift Annuities will be going up.  This is the first change in six years, and the first increase in over 20 years.  The chart below shows current one-life rates and the increased rates that start July 1, for various ages.  Rates for two-life gift annuities will also be higher.

 

Current rates

New rates

60

   4.4%

   4.7%

62

4.5

4.8

64

4.6

5.0

66

4.8

5.2

68

4.9

5.3

70

5.1

5.6

72

5.4

5.8

74

5.7

6.1

76

6.0

6.4

78

6.4

6.8

80

6.8

7.3

82

7.2

7.7

84

7.6

8.1

86

8.0

8.5

88

8.4

8.9

90 or older

9.0

9.5

Charitable gift annuities are contracts in which charity agrees to make fixed payments for life, for one or two individuals, in exchange for a donor’s gift of cash or appreciated assets.  A portion of the annual amount received may be tax-free or favorably taxed capital gains income to the annuitant.  In addition, donors are entitled to income tax charitable deductions for a portion of the gift amount.  For example, on July 1, George, age 75, transfers $50,000 in cash to fund a charitable gift annuity.  He receives:

  • Payments totaling $3,100 (6.2%) each year, of which $2,244 will be tax-free during his life expectancy;

  • A charitable deduction of $22,159;

  • The satisfaction of providing for a favorite charity.

Gift annuities can be arranged to begin payment in the year of the gift or payments can be postponed until some later date. Deferred payment gift annuities offer higher payout rates and charitable deductions.