Create a Charitable Gift Annuity
Provide generous support to Reed and generate a lifetime payment.
A charitable gift annuity is a simple contract between you and Reed College. You make a gift of cash, securities, or other assets to Reed. In exchange, Reed agrees to pay you, or one or two other persons (the "annuitant(s)"), a fixed sum each year for life. These payments are backed by all the assets of the college and will not change regardless of fluctuations in the stock market or the economy in general. The payment amount depends on the age of the annuitant(s) at the time of your gift. The older the annuitant(s), the higher the payment.
Good Tax News
- In the year that you create a charitable gift annuity, you are eligible to claim an income tax charitable deduction for the estimated portion of the assets that will ultimately go to Reed. If you are unable to take advantage of the full amount of the deduction the first year, you can carry it over for up to five additional years.
- If you fund your Reed gift annuity with cash, you receive a significant portion of the payments tax-free.
- If you use appreciated securities or other long-term assets to fund an annuity, you bypass much of the capital gains tax that would otherwise be due; and, if you name yourself as an annuitant, you can spread the tax due on any capital gain over your life expectancy at a more favorable capital gains tax rate.
Elise, a widow at age 78, wants to preserve or increase her retirement income. Years ago, she and her late husband acquired stock for $30,000. That stock is now worth $75,000, and pays 2.5 percent ($1,875) in dividends each year. If Elise gives the stock to Reed in exchange for a charitable gift annuity, she will increase the rate of return to 6.4 percent, receiving $4,800 each year for the rest of her life. Of this income amount, $1,519 will be tax-free. She will receive a charitable deduction of $35,139. In addition, she will escape or greatly reduce the capital gains tax that would have been due if the asset were sold.
This guide is not intended to provide specific advice about your estate plan or to recommend a specific course of action. We suggest you consult your professional advisers before taking any action, then contact Reed's planned giving office to learn more about these giving strategies. Charitable gift annuities from Reed are not available in all states.