Charitable Gift Annuities: The Gift That Pays You Back
Make a gift that pays you income now and benefits charity later and now!
Now is a good time for people over the age of 70 ½ to think about setting up a charitable gift annuity. This is a wonderful way to make a gift that pays you income for life and benefits charity upon death. Rates went up on January 1, making them even more attractive.
A gift annuity has two components: financial (the income you receive) and charitable (the assets remaining at death go to charity).
Thanks to the Secure 2.0 Act, you can make a one-time transfer of $53,000 directly from your IRA to the Community Foundation to fund your gift annuity (double that for spouses). This transfer counts toward your Required Minimum Distribution (RMD) and is excluded from your income. This is a great option for people who do not need their full RMD and would like to convert it to a lifetime income stream.
Typically, the annuity would pay you now and only benefit charity later. However, Lilly Endowment Inc. will now match the charitable gift value of your annuity $2 for every $1.
How It Works: John is 75 years old. He transfers $53,000 directly from his IRA to the Community Foundation to receive lifelong payments from a charitable gift annuity. Based on his age, he qualifies for a 7% annuity rate. He will receive annual payments of $3,710. Over his lifetime, the total payments are estimated to exceed $58,000. Upon death, any assets remaining in the annuity will go into the Community Endowment Fund.
But that’s not all! John’s gift annuity brings immediate income to John and also to the Community Foundation. Lilly Endowment Inc. will match the charitable value of his annuity ($20,000) with a $40,000 current contribution to our Community Endowment Fund, increasing the support we can give to local charities each year from now on.
For a free, personalized illustration, contact Rose Meissner at (574) 232-0041 or email rose@cfsjc.org.