Charitable Gift Annuity
The charitable gift annuity is a simple contract in which Andover commits to pay you and up to one other beneficiary a lifetime income. Payments are fixed and backed by the full assets of the Academy. The rate paid by the annuity is determined by the age/s of the income beneficiary/ies, and a portion of the income may be tax advantaged.
The most common form of gift annuity begins making payments immediately on a quarterly basis in March, June, September, and December. Income beneficiaries must be at least 40 years old for at the time the annuity is established and the funding minimum is $10,000. Funding assets may be in the form of cash or readily marketable securities. Please contact David Flash or Connie Pawelczak for more information.
How It Works:
- You transfer cash, securities, or other property to Andover.
- You receive an income tax deduction and may save capital gains tax.
- Andover pays a fixed amount each year to you or anyone you name for life. Typically, a portion of these payments is tax-free.
- When the gift annuity ends, its remaining principal passes to Andover.
Gift Annuity Payment Rates
|
Sample Age
|
|
One Life
|
Available Rate
|
| 55 |
4.8% |
| 60 |
5.0% |
| 65 |
5.3% |
| 70 |
5.7% |
| 75 |
6.3% |
| 80 |
7.1% |
Two Lives
|
Available Rate
|
| 55, 50 |
3.9% |
| 60, 55 |
4.4% |
| 65, 60 |
4.8% |
| 70, 65 |
5.0% |
| 75, 70 |
5.3% |
| 80, 75 |
5.8% |
Example 1
Mark Newman, age 75, owns securities worth $100,000, which are currently paying 2 percent or an annual income of $2,000. To provide long-term support to the sciences at Phillips Academy, Mark transfers his securities to Andover to create an immediate payment gift annuity that will provide him $$6,300 annually for the rest of his life. He also receives a charitable income tax deduction of $45,433 for making the gift, which will ultimately benefit the science department
Tax deduction now; fixed income later
You can also choose to establish an annuity now that begins paying you income later. A deferred gift annuity offers the benefit of an immediate charitable income tax deduction coupled with a future fixed stream of income. The longer period you choose to wait to receive income, the higher the rate you are qualified to receive.
Example 2
Sarah Brown, age 60, plans to retire in 10 years. She wishes to make an unrestricted gift to Andover, but is concerned about retirement income for her and her husband, Sam, also age 60. She chooses to make a gift of $25,000 and defer payment until she and Sam are both 70 years old. She receives an immediate charitable income tax deduction of $8,052 and qualifies for an annual rate of 7.8 percent, or $1,950 annually, starting in 10 years and continuing for the longer of Sarah and Sam’s lifetimes.