Gift Annuity

With this method of giving you transfer cash or securities to the Sedalia School District Foundation in return for a fixed income for you and/or your designee. Charitable deductions vary according to the amount of the gift, the annuity rate, and the ages of the income beneficiaries. Part of each payment will be taxed at ordinary income rates and depending on the ages of the beneficiaries part may be tax free for a period of years. If appreciated property is used, part will be taxed at capital gain rates. An annuity requires a gift of $5,000 or more, and the minimum age to participate in this type of plan is 60.

A Gift Annuity (also referred to as a “charitable Gift Annuity” or “CGA”) is a contract (not a “trust”), under which a charity, in return for a transfer of cash, marketable securities or other assets, agrees to pay a fixed amount of money (payment) to one or two individuals, for their lifetime, not a term of years.

A person who receives payments is called an “annuitant” or “beneficiary”. The payments (called the “annuity”) are fixed and unchanged for the term of the contract. The annuity payments are NOT called “income”, for a portion of the payments are considered to be a partial tax-free return of the donor’s gift, which are spread “ratably” (in equal payments) over the life expectancy of the annuitant(s).

The contributed property (the gift), given irrevocably, becomes a part of the charity’s assets, and the payments are a general obligation of the charity. The annuity is backed by the charity’s entire assets, not just by the property contributed. Unlike a trust, annuity payments continue for the life/lives of the annuitant(s), and not ONLY as long as assets remain in the Gift Annuity Fund.