Charitable Gift Annuity Story:
Herb, age 67, is a St. John’s grandparent and would like to make a significant gift. He is a successful Houston professional who is not certain if/when he will retire. Herb puts the maximum he can into his 401(k) and would like to set aside even more if he could do so in tax-advantaged ways. Furthermore, he would like to lock in the value of the highly appreciated growth stock he now holds so that he could benefit from its value when he retires, whenever that is.
Herb bought a tech start-up a number of years ago for $25,000, and the company has done well, its stock rising to a value of $100,000 today. But Herb is uncertain about the company’s future and would like to assure himself that he is gaining the maximum benefit from his wise investment. Maintaining control over his future cash flow is also important to Herb, and he would like to know that he can access a positive stream of income when he needs it without locking himself to a certain date. Being able to make a long-term gift and get a current income tax deduction are also key attractions—all benefits that flow from a deferred flexible charitable gift annuity. In Herb’s case, if he postpones taking the income until he is at least 72, he can use the appreciated stock, get a current tax deduction of $47,957, and an income stream of 6.3% for life. If he waits until he is 75, the income payment jumps to 7.4%, going up every year he waits after that. Additionally, he is able to make a $100,000 gift in the process.