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Flexible Gift Annuity: The Details

Is this gift right for you?

A flexible gift annuity is for you if…

  • You are in your peak earning years, looking for both income tax savings now and an additional source of revenue when you retire.
  • You want to make a significant gift to SHSU and receive payments in return, but want flexibility around when the payments will begin.
  • You want to maximize the payments you receive from your planned gift — and you want to lower your income tax on those payments.
  • You want the security of payments that won't fluctuate during your lifetime.
  • You also appreciate the safety of your payments being a general financial obligation of Sam Houston State University.

This version of the charitable gift annuity is especially designed for younger donors. Called the flexible payment gift annuity, it makes fixed payments to you and/or another beneficiary for life, with payments commencing at a future date. Because of the flexible deferral of income:

  • Sam Houston State University can offer a higher income rate for these annuities than for annuities whose income starts immediately, and
  • You can select a range of dates to start your payments.

These two features make the flexible payment gift annuity quite attractive to donors in high-earnings years who are concerned about securing current tax deductions, additional sources of retirement income and maintaining flexibility for when to start retirement income.

Use a flexible payment gift annuity to help fund your retirement

Pensions and other retirement plans limit the amount of tax-deductible annual retirement contributions that individuals can make. If you would like to set aside an additional $10,000 or more each year for your retirement, you could fund annual flexible payment gift annuities at Sam Houston State University. Every flexible payment gift annuity would provide you with an income tax charitable deduction and add to your future retirement income. Each time you set up a new flexible payment gift annuity, you set the range of years for when you might want the annuity payments to begin. When you want the payments to start, you simply notify SHSU and we start making payments for the rest of your life. The longer you wait to start receiving payments, the greater the payments to you will be.

Planning points

The flexible payment gift annuity offers the same benefits of simplicity, security, and attractive income taxation that the deferred payment gift annuity provides our donors:

  • Your flexible payment gift annuity is a contract between SHSU and you, and your annuity payments are an obligation backed by our corporate assets;
  • Your payment amount is determined based upon when you elect to start payments—the longer you wait to start payments, the greater the payment amount you will receive once the annuity starts;
  • You secure a charitable income tax deduction based on the market value of the assets you contributed, minus the present value of the life-income interest you retained—the deduction is calculated assuming that you start payments on the first date you are eligible, even if you defer the start of payments to a later date;
  • No up-front capital gains tax is payable if you fund your flexible payment gift annuity with appreciated securities; only a portion of your gain is recognized, with the tax spread over your annuity payments;
  • Part of each annuity payment to you comes tax-free as the return of principal;

    Please Note: The IRS provides that the capital gain and tax-free income benefits are in effect during your life expectancy. If you live longer, the entire annuity payment will be taxed to you.

  • The balance remaining in your flexible payment gift annuity after the death of the beneficiaries will be used by SHSU for the purpose you designated when you created the gift annuity.
  • A flexible payment gift annuity at SHSU can be made with a gift of $10,000 or more.

How do you create a flexible payment gift annuity?

We will provide a draft of the flexible payment gift annuity agreement for review by you. As always, we encourage you to seek the advice of your attorney or financial advisor. We'd be happy to share additional material with them.

Please Note: This information is for illustrative purposes only and is not intended as legal, tax or financial advice. Consult your legal, tax and financial advisors prior to making any material decisions based on this data.

Please contact us so that we can assist you through every step of the process.

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