|
It's a Great Time to Consider a Charitable Gift Annuity
You can establish charitable gift annuities, or CGAs, during your lifetime, or you can establish them through your will for your surviving beneficiaries. CGAs are a time-tested strategy of providing lifelong income to yourself, your spouse or another loved one from a gift to your favorite charitable organization. The two core elements underlying CGAs have made them even more attractive today:
1. Higher Gift Annuity Rates: Most charities that offer CGAs follow the rates suggested by the American Council on Gift Annuities, or ACGA. In early 2023, the ACGA raised its recommended rates by 0.4% to 0.5%, depending on the age of the annuitant, which raises the rate with each passing year.
2. Higher Charitable Deduction: Due to recent increases in inflation, the IRS interest assumption used in calculating the income-tax charitable deduction for a CGA also increased, resulting in larger deductions.
An additional benefit from a gift annuity is that a portion of your CGA payments will be tax-free to you until you pass your IRS-calculated actuarial life expectancy. The amount of your tax-free income depends on whether you fund your CGA with cash or appreciated stock.
For an illustration comparing how funding a CGA with cash or appreciated stock affects taxes, request our guide, 7 Smart Strategies for Year-End Tax Planning and Charitable Giving in 2023. |
