Hospital supporters who are younger than 65 years of age can still fund a charitable gift annuity with the Hospital and choose to begin receiving payments at a later date. Or, supporters who have already reached retirement may nonetheless want to wait a few years before their gift annuity starts making payments to them. In exchange for this deferral period, these supporters receive a higher payout from their gift annuity and are entitled to a larger income tax charitable deduction as compared to a regular charitable gift annuity.
The accompanying chart shows the payout rates when deferred payments are made to one person. Payments may also be made to two people, in which case the annuity payout is generally lower.
Example: Karen, age 75, uses $10,000 in cash to fund a charitable gift annuity. She is willing to wait 15 years before receiving her first payment. If Karen itemizes her deductions on her tax return, she’ll be entitled to an income tax charitable deduction of $8,666. She’ll receive $1,450 ($10,000 x 14.5%) each year for the rest of her life. Of that amount, $273 will be tax-free and $1,177 will be taxed as ordinary income. After five years from the year the payments begin, the entire payment will be taxed as ordinary income. (According to IRS regulations, Karen’s income tax charitable deduction will vary slightly depending on the month she funds the annuity.)
For more information on the Hospital’s charitable gift annuity program, please contact the Planned Giving Office at (203) 852-2933 or email@example.com. There is no cost or obligation to you.