Gift Annuity Calculator
Estimate the potential annual payments you could receive from a charitable gift annuity.
Your estimated annual payment:
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Understanding Charitable Gift Annuities
A Charitable Gift Annuity (CGA) is a contract between you and a qualified charity. In exchange for a significant gift of cash or securities, the charity promises to pay you (and/or another beneficiary) a fixed, guaranteed stream of income for life. It's a way to support a cause you care about while also securing a reliable income for yourself.
How it Works:
- Gift: You transfer assets (cash or appreciated securities) to the charity.
- Annuity Contract: The charity issues a contract promising to pay you a fixed amount for life, based on your age, the amount of your gift, and the annuity rate set by the charity.
- Income Payments: You receive regular payments (usually quarterly or annually).
- Charitable Benefit: Upon the passing of the annuitant(s), the remaining assets from your gift pass to the charity for its mission.
Key Benefits of a Gift Annuity:
- Income for Life: Provides a predictable income stream, regardless of market fluctuations.
- Tax Advantages:
- Immediate Income Tax Deduction: You may be able to claim a charitable income tax deduction in the year of your gift for the present value of the future gift to the charity.
- Tax-Deferred Capital Gains: If funded with appreciated securities, a portion of the capital gains tax is deferred.
- Tax-Wise Income Payments: A portion of your annuity payments may be tax-free, and another portion may be taxed at lower capital gains rates, depending on your age and the payout rate.
- Simplicity: Relatively easy to set up with a charitable organization.
- Support Your Favorite Cause: Allows you to make a lasting impact on an organization you believe in.
How the Calculator Works:
This calculator provides an estimate based on the following simplified formula:
Estimated Annual Payment = Gift Amount × (Annuity Rate / 100)
For example, if you give $10,000 and the annuity rate for your age is 5.5%, your estimated annual payment would be $10,000 × 0.055 = $550. Note that actual rates can vary by charity and are based on ACGA (American Council on Gift Annuities) recommended rates or the charity's own schedule. The actual tax benefits are more complex and depend on individual circumstances, IRS rules, and the specific terms of the agreement.
Important Considerations:
- Fixed Payments: While secure, the payment amount does not increase with inflation.
- Irrevocable Gift: Once made, the gift cannot be revoked.
- Charity's Financial Health: Ensure the charity is financially stable and reputable.
- ACGA Rates: Rates are generally set by the American Council on Gift Annuities (ACGA) and are recommended guidelines. Charities may offer rates slightly higher or lower.
This calculator is for informational purposes only and does not constitute financial or tax advice. Consult with your financial advisor and tax professional before making any decisions about a charitable gift annuity.