If you are 50 or older, a Charitable Retirement Annuity (CRA) can provide you with income and/or capital-gains tax advantages and high, fixed income (up to 15.3 percent, partially tax-free) when you reach 65.
What's more, the same investment that can give you economic security in retirement will help millions of people in need.
The Charitable Retirement Annuity (CRA) is created by an agreement between a donor and UJA-Federation for the benefit of both. This annuity can be used as a retirement-planning vehicle for individuals younger than 65 to supplement existing retirement assets. It is particularly appealing to donors who are restricted in making additional contributions to their existing plans.
In return for a gift to UJA-Federation, the donor is paid a fixed amount of income on a regular basis, beginning at age 65. A portion of the gift qualifies for a current income-tax deduction, thereby reducing taxes, and the full value of the gift is removed from the donor's estate. The younger the donor, the larger the tax-deductible portion of the gift. In addition, part of the annuity payment may be received as tax-free income.
If the CRA 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, 8.5 percent; age 80, 9.6 percent; age 85, 10.9 percent; age 90 and over, 12 percent.
Example: A donor, age 50, enters into a CRA designating, UJA-Federation or one of its beneficiary agencies to be the recipient of the charitable portion of a $10,000 cash gift. The donor receives a current income-tax charitable deduction of $3,192 and a guaranteed annual payment of $1,530, beginning at age 65. In addition, the full value of the $10,000 gift is removed from the donor's estate for estate-tax purposes.
Many donors create CRAs on an annual basis to build up their retirement assets. In addition, the donor may name a joint and successor beneficiary who will receive the annuity at the end of the donor's lifetime, commencing on the date of the donor's 65th birthday or thereafter.
As you can see, the CRA enables the donor to enjoy substantial financial benefits while making a charitable contribution. UJA-Federation's CRA offers the donor the distinct advantage of a guaranteed annuity amount at age 65, as well as a current income tax deduction.
Advantages of a Charitable Retirement Annuity
- Guaranteed annual income beginning at age 65;
- Primary or supplementary tax-advantaged retirement plan;
- Current income-tax charitable deduction;
- Reduction of estate taxes;
- Portion of income may be received tax-free; and
- Opportunity to make a significant gift to UJA-Federation.
Download our One-Life Charitable Retirement Annuity Application
For more information, contact Planned Giving & Endowments at pge@ujafedny.org or at 1.800.997.5266.
