With the flexible start date option, you can set any number of years as a window to begin receiving payments. Then you can wait to choose your payment start date until you’re ready. The longer you defer payments, the higher the payments will be.
Like most charities, National Gift Annuity Foundation offers the maximum charitable gift annuity rates recommended by the American Council on Gift Annuities (ACGA).We will be happy to provide information and calculations based on various “window” start dates for your Flexible Gift Annuity. You can also perform calculations for yourself on our Flexible Gift Annuity Calculator
Your income tax charitable deduction will be based upon the first year in the window you can start to receive payments.For example, if your deferral window is anywhere from 5 to 15 years from now, your income tax deduction will be calculated based on the assumption that you start taking payments in year 5, even if you actually wait until year 15 to do so.You will claim your income tax charitable deduction in the year you create the gift annuity.
Just as with Immediate
and Deferred Gift Annuities
, payments from Flexible Gift Annuities are taxed based upon the assets used to fund the gift annuity. If you fund your gift with cash, a portion of each payment will be taxed at ordinary income tax rates and a portion is tax-free return of principal. However, if you fund your gift annuity with appreciated stock, a portion of each payment is taxed as ordinary income, a portion is taxed as capital gain, and a portion is tax-free return of principal.We can assist in determining the taxation for any particular gift.
A Flexible Gift Annuity can benefit a maximum of two beneficiaries. Often, the donor and her spouse are the beneficiaries, but you could also name children, parents, or friends as annuitants.
Note that naming beneficiaries other than a spouse will raise gift tax considerations and cause immediate recognition of capital gain on appreciated property.
For more flexible beneficiary options, you can explore Charitable Remainder Trust options.
Yes, you may. In fact, you must elect a specific start date in the defined window if you wish to begin receiving payments before the end of the window. You can choose whatever date makes sense, as long as it is at least one year from the date the Flexible Gift Annuity is created. And remember: the longer you defer payments, the larger your payments will be.
One is not necessarily better than the other. Both have distinct advantages.
A gift of cash will produce a larger tax-free portion of the annuity and be deductible against a larger percentage of your adjusted gross income, but you will avoid a portion of capital gain on appreciated stock used to fund the annuity (and defer the rest).
Your charitable deduction and annuity rate are not affected by the type of asset used to fund the gift.