The new tax law has prompted a lot of conversation about deductions and tax brackets. Lost in the discussion has been the variety of other benefits that lead Massachusetts General Hospital supporters to make a charitable gift in a particular way.
A gift annuity, for example, does offer an immediate income tax charitable deduction that may save taxes for some supporters. But many donors find the other benefits of a gift annuity to be of equal or greater value. This gift can benefit those who are thinking about retiring early or planning for retirement, while still supporting Mass General. Here’s how:
If a gift annuity sounds right for you, we’ll be happy to provide specific information on the payments you will receive.
Increased cash flow
Common assets used to fund a gift annuity are from savings, CDs, or long-term appreciated stock. These assets are usually not generating much in interest or dividends. In making the contribution you are giving away the asset, but the cash flow from that asset likely will increase significantly. For example, if you are 60 when you make the gift and you elect to defer the start of your payments until you turn 66, you will receive an annuity rate of 5.8%. Check your rates.
Tax free payments
When you contribute cash, the payments you receive from a gift annuity will be part tax-free and part ordinary income. The tax-free portion will last for a period of years determined by your life expectancy at the time the gift is made.
Capital gains tax avoidance/deferral
When you make a gift using long-term appreciated stock, you avoid some of the capital gain. An added benefit, if the donor is the annuitant, is that the remaining capital gain is taxed in the annuity payments over the donor’s life expectancy. The annuity payments will in most cases still include some tax-free income and ordinary income.
If a gift annuity sounds right for you, we’ll be happy to provide specific information on the payments you will receive. We’d also be glad to talk with you about gift options that can provide other benefits that might fit with your needs, allowing you to best align your charitable, financial, and estate planning goals.
Learn how easy it is to make a planned gift
For more than 200 years, friends like you have been making great medicine at Massachusetts General Hospital possible. Our planned giving team can help you create a legacy that advances medicine and scientific discovery for future generations.
The Phillips Society represents those who include Mass General in their long-term plans, and those who build an endowment fund.
