This ongoing feature of Intouch identifies ways in which individuals can make a special commitment or gift to the NIACC Foundation through gift planning in estates or other financial planning.
Part II - The Charitable Gift Annuity; Creating Income through a Charitable Gift
A gift of a principal sum ($1000 or more) is the basis of an agreement to pay you, the donor, or another person a fixed annual sum for life. At the time of the gift, the size of the gift and life expectancy are used to determine the amount of fixed annual income for life. At the death of the income beneficiary(s), the remainder value of the gift is retained by the NIACC Foundation as the final beneficiary of the Gift Annuity Agreement. It is a win-win charitable gift. You or a named beneficiary boost your retirement income and the NIACC Foundation benefits from your planning.
Take for example, Mrs. Johnson. At age 82, she created a charitable gift annuity with $25,000 in cash. During the term of the her life, $2,525 will be paid annually in quarterly payments of $631.25 to the beneficiary, herself. To date, Mrs. Johnson has already received over $7,500 in income (partially tax free).
Annuity FAQs (Frequently Asked Questions & Answers)
1. Can a husband and wife jointly establish an annuity?
Yes. Upon the death of either spouse, the annuity continues to pay the full amount of the annuity contract. Whether married, or unmarried, the annuity can be jointly held with anyone of your choice, friends or relatives. Full payments are received until the death of both parties.
2. Besides cash, what other forms of assets can be used to establish a gift annuity?
Appreciated assets (publicly traded securities, stocks, bonds, and real property) are great ways to fund annuities. Keep in mind, the appreciated value is used in determining the initial annuity amount.
3. What are tax benefits from a gift annuity?
4. How safe is the annuity--is it guaranteed?
The annuity is an obligation and legal reserve instrument of the North Iowa Area Community College Foundation. The full faith and resources of NIACC stand behind the annuity agreement.
On April 15, 1998, the American Council on Gift annuities announced new suggested maximum annuity rates. The new rates will be effective for gift annuities funded on or after July 1, 1998. As a result of the lower rates, gift annuity deductions will increase for donors to charities that follow the ACGA guidelines.
Charitable gift annuities are great vehicles for the donor who wants to make a significant gift but is interested in lifetime income, perhaps to enhance annual retirement income. For a customized illustration of how a charitable gift annuity can benefit you, contact Lisa Balduf, NIACC Foundation, at 515-422-4397 or 1-888-GO NIACC, ext. 4397.
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