Deferred Gift Annuity
Several years ago Allen and Vicki invested $30,000 in what they believed to be an attractive stock. It turned out to be a very wise decision, because the value of the stock increased to $100,000 a few years later. Though they were not in need of additional income at the time, the couple decided to cash in on this growth and began considering selling the stock.
VICKI: We had had a good year and were looking for ways to maximize deductions and reduce what we owed in taxes. At the same time, we had been exploring the best way to make a gift to a local charity.
ALLEN: Vicki and I were both age 50 at the time, in good health and still working. And though we didn't really need extra current income, we were planning to retire at age 65 so we were always interested in smart retirement planning. Our goal was to be able to live comfortably and travel in our motor home to visit friends and family.
VICKI: I remember when we met with an advisor from the charity. He explained the benefits of setting up a deferred gift annuity. Instead of selling, we could give our stock to the charity and receive an immediate charitable tax deduction. Plus, when we turn 65, the deferred gift annuity would make annual retirement income payments to us for our lifetime.
ALLEN: We decided to set up the deferred gift annuity. And we experienced firsthand each of the benefits Vicki mentioned: we received a charitable tax deduction and tax savings immediately. And now that we're retired, we receive income each year that helps make our retirement travel possible. On top of all of this, a portion of the income payments we receive from the deferred gift annuity is tax free.