Annuity
The Gift That Gives Back
Here's how a charitable gift annuity works. Mr. Smith is 70 years old. After reviewing the information provided by Bolles and consulting with his advisor, he wishes to make a gift of $50,000 to Bolles. He has determined that he needs the income that is produced by the $50,000. Therefore, he irrevocably transfers $50,000 to Bolles in exchange for a charitable gift annuity.
According to the gift annuity rates recommended by the American Council on Gift Annuities, Bolles would agree to pay him for his lifetime an annual annuity of 6.5% of the principal amount at the time of the gift, or $3,250 per year. In addition to receiving regular fixed payments (partially tax-free), Mr. Smith will also receive a charitable income tax deduction.
How does Bolles benefit from this arrangement? Bolles takes the $50,000 and invests it in a special annuity fund, expecting not only to have enough to make the payments to Mr. Smith, but also to have enough left over after Mr. Smith is gone to benefit the School.
Here is a table showing other ages, the current annuity rate, the amount of the charitable deduction, and the tax-free portion of the annual income for one life annuity of $50,000.
FOR AN ANNUITY OF $50,000
| AGE OF DONOR | RATE OF RETURN | ANNUAL INCOME TO DONOR | TAX FREE PORTION OF ANNUAL INCOME | DONOR'S CHARITABLE DEDUCTION IN YEAR OF GIFT |
| 50 | 5.3% | $2,650 | $1,340 | $5,715 |
| 55 | 5.5% | 2,750 | 1,465 | 8,243 |
| 60 | 5.7% | 2,850 | 1,604 | 11,345 |
| 65 | 6.0% | 3,000 | 1,791 | 14,343 |
| 70 | 6.5% | 3,250 | 2,076 | 17,003 |
| 75 | 7.1% | 3,550 | 2,417 | 20,031 |
| 80 | 8.0% | 4,000 | 2,880 | 22,926 |
| 85 | 9.5% | 4,750 | 3,662 | 25,083 |
| 90 | 11.3% | 5,650 | 4,531 | 27,784 |
Gift annuities may be obtained for the donor, or by the donor for someone else. They may run for one life or for two lives. They may be funded for any amount over $10,000 with cash or marketable securities. Payments may begin soon after the gift is made or years later at the donor's discretion. Beside the more obvious uses, gift annuities may be used to help fund a college education or to supplement a retirement plan.
To learn more about the gift annuity program at Bolles, call Bob Wenzel at (904) 256-5015 or e-mail: to request more information.