Investing with Faith / Elisa Smith

New charitable gift annuity rates offer more benefits

The American Council on Gift Annuities (ACGA) announced effective on July 1, 2018, suggested maximum payout rates for charitable gift annuities will increase, and the Catholic Community Foundation will honor these new rates immediately.

A charitable gift annuity is a way for you to make a gift that will benefit your parish, school or other Catholic agency while receiving a fixed stream of income for life. The ACGA has not raised gift annuity rates since 2012. The new rates are higher than the previous rates and are based on the annuitant’s age at the time of the gift.

For example, prior to the new rates, if Maria, age 79, established a charitable gift annuity of $25,000 for the benefit of her parish, her payout rate would be 6.6 percent, and she would receive annual payments of $1,650. With the new payout rate, if she were to establish a charitable gift annuity, her payout rate would be 7.1 percent and her annual payment would be $1,775.

A charitable gift annuity differs from a commercial annuity. While both annuities are based on a contract between the issuer and the purchaser/donor and both provide an annuity payment, a charitable gift annuity provides an income tax deduction for the donor. In addition, at the annuitant’s death, the balance remaining in the annuity is transferred to the donor’s intended ministry whether it is for a parish, school or other Catholic agency.

In addition to increasing your retirement income while making a gift to charity, a portion of each payment is income tax-free throughout the annuitant’s estimated life expectancy.

While retired donors may be better off choosing a gift annuity that starts payments right away, those donors who are still working and not needing the income stream now could consider the deferred or flexible options. If you opt for one of these, you will get a bigger payout the longer you postpone the income stream.

The staff of the Catholic Community Foundation would be happy to send you an illustration showing you the benefits you can receive from a charitable gift annuity. Your personalized illustration will include your potential income tax charitable deduction and the amount of your lifetime annual payments.

Please contact us at 1-800-382-9836, ext. 1482, or ccf@archindy.org to obtain your free illustration. Or visit our website, www.archindy.org/CCF, for more information.

Have a blessed summer!
 

(Elisa Smith is director of the archdiocesan Catholic Community Foundation. Tax information or legal information provided herein is not intended as tax or legal advice and cannot be relied on to avoid statutory penalties. Always check with your legal, tax and financial advisors before implementing any gift plan.) †