Can I gift an annuity to a charity?

Individuals or couples can set up a charitable gift annuity. (You are the “annuitants,” which is the specific name for beneficiaries of annuities and many insurance policies.) Depending on the charity, your annuity can be funded with cash donations, but potentially also securities and gifts of personal property.

What can be used to fund a charitable gift annuity?

You can fund a charitable gift annuity with an irrevocable donation of cash, publicly traded securities, or other assets, such as real estate, art, or collectibles. Your donation may earn you an immediate partial tax deduction.

Are charitable gift annuities tax deductible?

If you itemize your deductions, you can claim a federal income tax charitable deduction for a portion of the amount transferred to the charity in exchange for a gift annuity. The deduction is equal to the amount of the contribution less the present value of the payments that will be made to the annuitant(s).

How much of a charitable gift annuity is deductible?

You get an immediate charitable tax deduction in the year of your gift, usually between 25% and 55% of the amount you transfer to charity. With a cash donation, your annuity income typically will be part ordinary income and part tax-free return of principal.

How can I avoid paying taxes on annuities?

With a deferred annuity, IRS rules state that you must withdraw all of the taxable interest first before withdrawing any tax-free principal. You can avoid this significant drawback by converting an existing fixed-rate, fixed-indexed or variable deferred annuity into an income annuity.

Can I change the owner of an annuity?

Contact your annuity company and let your account manager know you want to change the owner of your contract. The annuity company will send you a change of ownership form. Fill out the change of ownership form for your annuity.

What is the difference between a charitable remainder trust and a charitable gift annuity?

Unlike a gift annuity, a charitable remainder trust is not a contract with a charity to make a guaranteed payment. The payments from the CRAT continue if the trust has enough assets to make the payments. A CRAT can be established to make payments for a fixed term of up to 20 years and/or to more than two beneficiaries.

Can I fund a charitable gift annuity with an IRA?

You can fund a charitable gift annuity with your IRA. The federal charitable deduction and 40% Montana tax credit for endowed philanthropy that you receive when the charitable gift annuity is created, significantly counters the income tax you will pay on your distribution from you IRA.

What is the best thing to do with an inherited annuity?

You could opt to take any money remaining in an inherited annuity in one lump sum. You’d have to pay any taxes due on the benefits at the time you receive them. You get payments for the remainder of your life, but the payment amount is not based on your life expectancy.

Who is the owner of an annuity?

The owner of the annuity is the person who pays the initial premium to the insurance company and has the authority to make withdrawals, change the beneficiaries named in the contract and terminate the annuity. The annuitant is the person whose life determines the annuity payouts.

Can an annuity be passed on to heirs?

If an annuity contract has a death-benefit provision, the owner can designate a beneficiary to inherit the remaining annuity payments after death. The earnings on an inherited annuity are taxable.

What you must know about charitable gift annuities?

Charitable Gift Annuities for Charities CGAs entice hesitant donors to make a donation because they will receive something in return. Gift annuities promote long-term relationships with donors. Charities have some flexibility with the donation, such as using the gift immediately or investing the gift and making payments on the annuity from the earnings.

What are charitable gift annuities and what are the benefits?

What is a Charitable Gift Annuity. A charitable gift annuity is an agreement in which an individual transfers assets to a charity in exchange for a lifetime income stream and a tax benefit. As with any other life annuity, when the annuitant dies the annuity payments are stopped.

How annuities can benefit your charity?

Benefits of a charitable gift annuity Income stream for the rest of your life Immediate (partial) tax deduction, based on your life expectancy and the anticipated income stream Potential for a portion of the income stream to be tax-free Possibility of donating many types of assets: cash, securities plus personal property

Does a charitable gift annuity make sense?

If you want to give money to your school as well as receive an income stream, a charitable gift annuity can make sense. A charitable gift annuity is a contract between you and your alma mater. You donate cash, securities or other assets to the school and get a charitable tax deduction up front.