With yields on CD’s, savings accounts and money market funds near historic lows, it is no wonder that many savers are taking a serious look at the benefits of gift annuities. There are a number of advantages that gift annuities offer, indcluding:
Attractive Rates. Mary Jones is receiving a modest income from her Certificate of Deposit.
When the CD matures in one month, she plans on obtaining an Esperança gift annuity and will start receiving 5.8 percent. Gift annuity rates are very attractive for older friends of Esperança. Many folks in their retirement years are pleased when they compare their low investment yields with the current annuity rates offered by Esperança.
Tax-Free Payments. Part of each annuity payment is tax-free. For example, Mrs. Jones, age 75, contributed $50,000 towards a gift annuity. Every year, she will receive $2,900 (5.8%). Of this amount, approximately 70% will be excluded from income taxes. The tax-free portion of the annuity payment is considered “return of principle” and continues through estimated life expectancy.
Income Tax Deduction. Since a gift annuity is partially a gift and partially an investment in an annuity contract, the donor who itemizes is entitled to an income tax deduction for the gift portion of his or her annuity. With the example of Mrs. Jones above, her $50,000 gift annuity gave her a tax deduction of more than $22,000. The deduction is available for the tax year when the gift annuity is established. If the deduction cannot be used entirely that year, Mrs. Jones has up to five years to carry forward the unused amount. The tax advantages make the effective rate of the gift annuity even higher than the rate used to establish the annuity.
Fixed, Regular Payments. It’s nice to be able to count on a specific payment no matter what happens with fluctuating interest rates. Your annuity payments will not change from year to year.
Passing On A Legacy. Perhaps the greatest benefit of an Esperança gift annuity is the personal fulfillment you receive by helping Esperança as well as yourself. Your gift annuity helps Esperanҫa continue its important mission of transforming lives. People with highly appreciated stock and other assets can also benefit from a gift annuity. They particularly like the partial bypass of capital gains they receive.
You owe it to yourself to find out more about a gift annuity with Esperança. To obtain a personalized illustration, please contact Tom Egan at 602-252-7772 ext 103 or email
