Charitable Gift Annuity

With a Charitable Gift Annuity (CGA), you can make a gift to Southwestern Medical Foundation or UT Southwestern and receive a guaranteed stream of fixed income payments for life.

You may find that one or more CGAs can be a rewarding part of your retirement plan. Consider the following:

• You can implement a CGA with a modest contribution of cash, stocks, or mutual funds.
• You can elect a payment arrangement that is convenient for you (typically, annually or quarterly).
• You qualify for an immediate income tax charitable deduction for the gift part of the transaction (not the annuity part of the transaction), subject to adjusted gross income (AGI) limitations.
• If you fund the CGA with appreciated assets, you may be able to spread out capital gains tax liability.
• Part of each annuity payment may be income tax free.
• You can count on and plan for a lifetime income stream for yourself and/or a loved one (two people max).

The payment amount is based on:

• The amount of the gift (higher gift amount = higher payment amount)
• The age(s) of whoever will be receiving the payments (older annuitants = higher payment amount)
• When payments will begin (deferring the start of payments = higher payment amount)
• The current rates for charitable gift annuities

Sample one-life gift annuity rates, effective January 1, 2024

Rates are subject to change. Contact us to verify the rate for your age.

OPTION 2: A Deferred CGA

This is an easy way to make a gift now but start receiving payments at a specified future date. You can time payments to retirement while locking in a higher income payment compared to an otherwise-similar immediate CGA.

• You select a payment start date at least one year in the future.
• Your gift still qualifies for an immediate income tax deduction.

OPTION 3: A Flexible Deferred CGA

This is simply a deferred CGA with an unspecified future start date. It allows you to postpone the decision on when you want to begin receiving payments within a predetermined time frame.

• You will receive a smaller immediate deduction based on the earliest possible start date.
• Your annuity rate increases with each year you continue to defer payments.
• Payments will begin automatically at the end of the time frame if you haven’t yet asked for them to begin.

This added flexibility is particularly useful for those who:

• Want to begin payments at retirement but haven’t yet chosen a retirement date
• Face a future expense without clear timing (such as the anticipation of needing to pay for a relative’s nursing home care at some point in the future)
• Want to maximize their annuity rate (and therefore payment amount) by waiting but are concerned they may need to begin receiving payments earlier

Evaluate the Fit

CGAs may be a particularly good option to consider if you:

• Are retired or near retirement
• Want to establish a source of fixed income payments to supplement other income streams in retirement
• Want to establish a source of fixed income for a loved one
• Could use a current charitable income tax deduction
• Would like to get rid of appreciated assets but don’t want to pay the associated capital gains tax
• Are an IRA owner age 70½ or older who wishes to make a one-time distribution to create a CGA
• Are comfortable funding the CGA with a minimum of $15,000

See How it Works

Susan makes an irrevocable gift of appreciated stock using a charitable gift annuity. In return, Southwestern Medical Foundation agrees to make lifetime annuity payments to Susan based on her age, the gift annuity rate, and the gift amount. Susan enjoys favorable taxation—part of each payment is tax-free return of principal, part is long-term capital gain, and the remainder is taxed as ordinary income.

Andy (age 58) doesn’t need additional income right now, but he would like to reduce his current income tax liability and supplement his future retirement income. He selects a deferred charitable gift annuity. He makes an irrevocable gift, and in return, Southwestern Medical Foundation agrees to make lifetime annuity payments to Andy beginning in 10 years. Delaying the start of payments increases his annuity income and qualifies for a larger tax deduction.

Consider Your Timing

If you want to qualify for a charitable deduction this year, you should have the CGA application and contribution to us by Friday, December 13, 2024.

We Can Help

We can provide you with one or more complimentary illustrations to help you estimate your deduction, your income payment amount, and your tax impact.