Gift Annuity Rates to be Lower After June 30, 2008
Gift Annuity Payout Rates Will be Lower for Annuities Created After June 30, 2008
The American Council on Gift Annuities (ACGA) has recommended gift annuity rate schedules since 1927. When a gift annuity is funded, the age-appropriate rate from the schedule determines an annual payment amount that never changes and is guaranteed by the charity for the life of the annuitant(s). Most charities, including Clarkson, voluntarily adopt ACGA rate schedules to eliminate competition and ensure that gift annuities remain charitable vehicles that may also offer an income tax deduction.
While the ACGA prefers not to adjust the rate schedule frequently, recent economic conditions have forced annual reviews. The ACGA announced in April its recommended rates will be lowered for gift annuities created after June 30, 2008. In general, rates will be reduced between 0.2% and 0.9%, depending on age. For example, a gift annuity at age 60 will decrease from 5.7% to 5.5%, and a gift annuity at age 89 will decrease from 11.0% to 10.1%.
The rate changes impact only gift annuities created after June 30. Payment amounts to income beneficiaries for all existing annuities will never be reduced.
If you are thinking of creating a gift annuity, it is wise to review a financial projection of your annuity before and after June 30 before making your decision. Even though the payout rates will go down as of July 1, there are other factors to consider as well. For example, your income tax deduction may go up, and the taxation of your income payments may change. The lower rate may also allow a larger remainder to charity. Determining your financial and philanthropic priorities will help you make the best decision.
For help with questions, contact Sal Cania, Director of Gift Planning, or call toll-free 877-928-4438.
To compare annuity rates before and after June 30, review our gift annuity rate schedule
You may create your own gift annuity projection with our gift calculator (it uses only the current rates) or request a projection from Clarkson.
To learn more about charitable gift annuities, request our workbook, Will a Gift-with-income Plan Work for Me?
The American Council on Gift Annuities (ACGA) has recommended gift annuity rate schedules since 1927. When a gift annuity is funded, the age-appropriate rate from the schedule determines an annual payment amount that never changes and is guaranteed by the charity for the life of the annuitant(s). Most charities, including Clarkson, voluntarily adopt ACGA rate schedules to eliminate competition and ensure that gift annuities remain charitable vehicles that may also offer an income tax deduction.
While the ACGA prefers not to adjust the rate schedule frequently, recent economic conditions have forced annual reviews. The ACGA announced in April its recommended rates will be lowered for gift annuities created after June 30, 2008. In general, rates will be reduced between 0.2% and 0.9%, depending on age. For example, a gift annuity at age 60 will decrease from 5.7% to 5.5%, and a gift annuity at age 89 will decrease from 11.0% to 10.1%.
The rate changes impact only gift annuities created after June 30. Payment amounts to income beneficiaries for all existing annuities will never be reduced.
If you are thinking of creating a gift annuity, it is wise to review a financial projection of your annuity before and after June 30 before making your decision. Even though the payout rates will go down as of July 1, there are other factors to consider as well. For example, your income tax deduction may go up, and the taxation of your income payments may change. The lower rate may also allow a larger remainder to charity. Determining your financial and philanthropic priorities will help you make the best decision.
For help with questions, contact Sal Cania, Director of Gift Planning, or call toll-free 877-928-4438.
To compare annuity rates before and after June 30, review our gift annuity rate schedule
You may create your own gift annuity projection with our gift calculator (it uses only the current rates) or request a projection from Clarkson.
To learn more about charitable gift annuities, request our workbook, Will a Gift-with-income Plan Work for Me?
This web page does not provide legal or financial advice, nor is it a comprehensive review of the topic. You should consult your legal and financial advisers and Clarkson University before making or planning your gift.