The Charitable Gift Annuity is created by an agreement between a donor and UJA-Federation for the benefit of both. These annuities can be used both as retirement-planning vehicles for individuals younger than 65 and as current income-generating vehicles for those 65 or older.
In return for a gift to UJA-Federation, a donor is paid a fixed amount of income on a regular basis, beginning at age 65. Click here to compute the effective rate of return for someone of your age and income bracket on our planned giving calculator. 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, part of the annuity payment may be received as tax-free income. For people younger than 65, these annuities can be purchased periodically to build a primary or supplementary 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. Typical gift-annuity rates are as follows: age 75, 7.9 percent; age 80, 8.9 percent; Age 85, 10.4 percent; age 90 and over, 12 percent.
Example: A donor, age 75, enters into a Charitable Gift Annuity agreement designating UJA-Federation or one of its beneficiary agencies to be the recipient of the charitable portion of her $10,000 cash gift.
Based on the annuity rate of 7.9 percent for a person age 75, the donor receives income payments of $790 in each full year for the rest of her life (payable in quarterly payments of $197.50 each). 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 charitable deduction of approximately $3,496, and the full value of the $10,000 gift is removed from the donor's estate for estate-tax purposes.
As you can see, the Charitable Gift Annuity enables the donor to enjoy substantial financial benefits and serves as a viable alternative to current low-yielding investments.
Download our Charitable Gift Annuity Application
Advantages of a Charitable Gift Annuity include:
- Guaranteed annual income;
- Primary or supplementary tax-advantaged retirement plan;
- Portion of income may be received tax-free;
- Current income-tax charitable deduction;
- Reduction of estate taxes; and
- Opportunity to make a significant gift to UJA-Federation.
For more information, contact Planned Giving & Endowments at pge@ujafedny.org or at 1.800.997.5266.
