These annuities can be used both as retirement planning vehicles for individuals younger than 65 and as current income-generating vehicles for those 65 and older.

In return for a gift to Literacy Partners, a donor is paid a fixed income beginning at age 65. A portion of the gift qualifies for a current income tax charitable deduction, thereby reducing taxes, and the full value of the gift is removed from the donor’s estate. In addition, a portion of the annuity payment may be received as tax-free income. For people younger than 65, these annuities can be purchased periodically in order to build a tax-advantaged retirement plan.

If the Charitable Gift Annuity is purchased by a donor who has already reached age 65, the donor will start to receive annuity income immediately, based on the annuity rate applicable to the donor’s age on the date of the agreement.

For example, a donor, age 70 enters into a Charitable Gift Annuity agreement designating Literacy Partners to be the recipient of the charitable portion of her $10,000 cash gift. Based on the annuity rate of 6.5% for a person age 70, the donor receives income payments of $650 in each full year for the rest of her life. A portion of each payment is received by the donor as ordinary income and a portion is received tax-free. In addition, the gift provides the donor with a current income tax deduction of approximately $4,427, and the full value of the $10,000 gift is removed from the donor’s estate for estate tax purposes.

Financial Benefits

• Fixed income payments for donor’s lifetime, or for joint lives of donor and spouse
• Payments can be made in quarterly, semi-annual or annual intervals
• Portion of value of contributed assets qualifies for income tax charitable deduction, reducing taxes
• If funded with appreciated stock, no capital gains tax due when securities are initially sold
• Potential substantial increase in return on assets
• Value of contributed assets is removed from donor’s estate
• Portion of annuity payments in initial years may be tax-free income
• Support Literacy Partners free adult literacy programs in New York City

Other Facts

• Cash or readily marketable appreciated stock can be used to fund a Charitable Gift Annuity
• Payments are based on the value of contributed assets and age(s) of donor(s)
• Rates are based on donor’s age at the time the agreement is established; the older the donor(s), the higher the rate
• Annuity for a couple pays a lower rate since a longer period of payments is presumed for two lives

Contact Us

For additional information about establishing a Literacy Partners Charitable Gift Annuity or to set up an appointment to discuss this or other planned giving options, please contact David Nathanson, Director of Finance at 646-237-0123 or davidn@literacypartners.org.

Be sure to consult your financial advisor before making a planned gift.

 

Other Options To Donate

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