What is a gift annuity?
- A gift annuity will pay the designated recipient(s) fixed,
equal payments for life.
- A gift annuity is irrevocable.
- The gift portion, (which will be different than the original contributed amount depending on how long payments are made) will go to their favorite ministry or program.
Example: A gift annuity in action
Here is one example of how a gift annuity can help: John, 83, and his wife Mary, 80, want a gift annuity to provide them with regular payments and a way to support their favorite Lutheran school even after the Lord calls them home.
They establish their gift annuity by sending a $10,000 check to the LCMS Foundation. Based on their ages, they know they will receive a gift annuity rate of 6.0* percent. That means they will receive annual annuity payments of $600 per year for their lifetimes. Since a portion of the gift annuity is a charitable contribution, the couple also gets an additional $4,164 income tax deduction for the year they establish their gift annuity. And, they enjoy even more tax savings. More than 80 percent of their annual $600 payment—$511—is tax free.
After John’s death, Mary will continue to receive the regular payments. After her death, the remaining balance on the couple’s gift annuity will go to their favorite ministry.
In general, annuity payments and the amount that eventually goes to the designated ministry are based on life expectancy. If the Lord calls John and Mary home at the age of their life expectancy, about half of the couple’s original $10,000 goes to their designated school. If they die before their life expectancy age, a larger amount goes to the ministry. If they live beyond their life expectancy age, the ministry receives less.
A sure thing
You have watched your investments fluctuate with the markets. There isn’t much security in knowing that your future can be tossed around with the wind. The depressed economic climate creates a world of anxiety for many who are entering or are in the season of life called retirement.
If you are looking for a way to secure your future, a gift annuity may be the answer.
Why choose a gift annuity?
- Receive regular, fixed payments for life
- Save on taxes
- Make a future gift to a school
- Earn a higher rate of return
Six ways to save on taxes
- A portion of your payments is tax-free. A larger percentage will be tax-free if you transfer cash to your gift annuity; a lesser percentage if you transfer securities.
- A portion of your gift is a charitable contribution. You can claim this deduction the year you establish your annuity.