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Deferred Gift Annuity
A deferred gift annuity begins to make payments at a future date that you select.
A deferred gift annuity is essentially the same as a gift annuity, with the exception that the payments do not start until a future date.
This type of agreement resembles a tax-deductible Individual Retirement Account (IRA). You receive a charitable income tax deduction now, during high earning years, and you receive income later, similar to a retirement plan.
Here is An Example:
"I'm Young Now, But I'd like Retirement Income Later."
Susan Switzerland is age 45. She has just sold her start-up business, The Gold Mine, and she would like to put part of her proceeds into retirement savings. She will put the rest of the proceeds into a new business called The New Strike. She decides to give Pomona College $100,000 to fund a deferred gift annuity that will begin to make payments to her when she turns 65.
Twenty years from now, the College will begin to make payments to Ms. Switzerland at an annual rate of 22.1%. Each year, it will pay her $22,100. These payment will continue for the rest of her life.
Ms. Switzerland may claim a charitable deduction of $41,900 from her gift now, thereby offsetting the income she is beginning to earn from her new venture. If she can't use all of the deduction this year, she can carry forward the balance for five additional years.
Susan's payments will be 13% tax-free, thereby increasing the tax benefits of her gift. The balance will be ordinary income.
Please contact us for more information on your particular situation.
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