Making a Difference

A New Year. A New Reason to Consider a Classic Gift.

Today, retirees and retirement planners are pulled in more directions than ever as they work to secure an appropriate level of retirement income that they won’t outlive. Now is the perfect time to consider a tried-and-true planning option—the charitable gift annuity (CGA). Learn more about the traditional benefits of CGAs, as well as developments that make them even more powerful today.

A CGA converts appreciated assets into a consistent, tax-advantaged revenue stream for life while fulfilling your charitable goals. This simple, straightforward option represents a win for both donors and charities.

Traditional Benefits

  1. Easy setup. CGAs are simple to arrange and, unlike a charitable trust, don’t require a large gift amount.
  2. Consistent, reliable income stream. CGAs create a stable source of income untouched by secondary market forces. The income amount depends on various factors, including the size of the gift, the current gift annuity rates, the age of the person receiving the payments (the older the annuitant, the higher the payments), and whether it is a single-life or joint-life annuity (the CGA can make payments to either one or two people). Deferring the start of payments is another way to increase the payment amount.
  3. Multiple tax benefits. First, a CGA offers a charitable income tax deduction based on the present value of the immediate gift. Second, the income payments from the CGA are partially considered a tax-free return of the principal. Third, if the CGA was created using an appreciated asset, such as stock or real estate, no capital gain tax is due on the gift portion, and the capital gains tax attributed to the annuity portion is spread out over time.

New Considerations

  1. New, higher annuity rates. Rates increased again on January 1, 2024, and are currently the highest they’ve been in years. Now could be the perfect time to lock them in and secure higher annuity payments for life.
  2. New, higher amount available for funding a CGA from an IRA. If you choose to fund your CGA directly from your IRA, the maximum amount has increased to $53,000 in 2024. This qualified charitable distribution from your IRA is tax free and counts toward your RMD if one is due. However, the rules are a bit different than for a traditional CGA. Ask us for details!

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