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Charitable Gift Annuity Example

Assume that a donor, age 75, has a $20,000 CD that he wants to donate the Legacy Fund but he needs the income to live on. He is currently getting 5% from his CD. How would a Gift Annuity from the United Way help him?

First of all, when he set up the Annuity, he would get a partial income tax deduction (assuming he itemizes his deductions). In this case, it would amount $8,135 which he could take this year or over this year plus the next five. The income produced by the Annuity would be $1640 per year, 64% higher than with the CD. And part of the income is tax-free! Below is a chart showing the comparative differences.

  Certificate of Deposit (CD) Charitable Gift Annuity
Tax Deduction -0- $8,135
Annual income generated $1,000 $1,640
Percentage which is tax-free 0% 60%
After-tax annual income (15% tax bracket) $850 $1,542
After-tax income to life expectancy (12 years) $10,200 $18,504
Eventual gift to the Legacy Fund $20,000 $15-20,000*

*Unknown because the interest earnings are unknown.

For more information

For additional information on any of these topics or a more detailed description the Legacy Fund fill out the following form and click "Send". Or call the Director of Major Gifts, United Way of the Plains, 267-1321.

Planned Giving Information Form

Name:
Spouse's Name:
Date of Birth:
Spouse's Date of Birth:
E-mail Address:
Telephone Number:
I would like information on:
Will Planning
Charitable Gift Annuities
Charitable Life Insurance
Gift of Appreciated Property
Charitable Remainder Trust
Beneficiary of my IRA

(Neither the author nor United Way of the Plains is engaged in rendering legal or tax advice. The purpose of this document is to offer information of a general character only. Advice from legal counsel should be sought when considering planned giving arrangements.)

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