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Alumni and Foundation

Charitable Gift Annuities

Many have found that making charitable gifts to MSCF while enjoying immediate tax savings and a source of additional income for one or more person’s lifetime can be a very attractive way to give. Charitable gift annuities are convenient and simple to establish. There is no need to change your will or other estate plans to fund a gift annuity.

How a charitable gift annuity works:

You transfer cash or other assets to the Murray State College Foundation and in return receive payments annually (or more frequently, if desired). The payment amount is fixed and will not change with interest rate and investment market fluctuations.

You are entitled to an income tax deduction equal to the value of the gift portion of your annuity.

Because the gift portion of your annuity will be used for charitable purposes, the amount of your gift annuity will generally not be included in your taxable or probate estate.

As part of their retirement planning, many persons choose to fund more than one gift annuity over time. As payment rates increase with age, each gift annuity generally features higher payments.

Unlock Income

Given recent stock market and interest rate trends, it may be especially attractive to fund a gift annuity with property such as stocks, mutual funds or other securities that have increased in value but yield less income than desired. This is due to the fact that payments and your charitable income tax deduction are based on the full value of the property, not just its original cost. Additional tax savings may be possible through the reduction and/or delay in capital gains tax that would be due if the property was sold.

See the example below for an illustration of how a gift annuity may benefit you and Murray State College Foundation.

Example Instructions:

John Smith, age 70, transfers assets valued at $10,000 to Murray State College Foundation in exchange for a charitable gift annuity.

Annual lifetime payments of 5.1% of the gift amount, which is $510 per year, are received. For the first 15.9 years, approximately $377 will be received income tax free.

The gift results in an itemized charitable income tax deduction of $4,002.

The charitable portion of the annuity is a gift to Murray State College Foundation.

Example for Two People

As noted above, a gift annuity can provide payments for an additional person if you desire. Payments can be received jointly with someone else receiving payments for life, or payments may be made to you alone for life, followed by payments to a second person.

The two-life rate for persons aged 70 and 75 would be 4.8% and your income tax deduction will be $3,349.

The assumed date of transfer for this example is February 4, 2016. The IRS approved discount rate of 2.20% has been selected to optimize the charitable deduction. NOTE: This calculation is provided for illustrative purposes only. The nature of assets transferred, the date of the gift, and other factors may have a material effect on your deduction. You should seek the advice of your advisors before making a gift of this type.

Please note Murray State College is unable to offer annuities in all states.

Enjoy Larger Payments In The Future

It is also possible to establish what is known as a “deferred gift annuity.” Using this option, your gift is completed now, and you enjoy an immediate income tax deduction for the value of the gift portion of the annuity. The payments are structured, however, to begin at least one year after the gift annuity is funded. Your tax deduction and payment rates will be higher as a result of delaying your payments. This can be an excellent way to make gifts while providing for an additional source of income in the future.

Charitable gift annuities are just one of the many special ways you can be a part of the future of Murray State College Foundation. We will be pleased to work with you and your advisors as you consider how charitable gifts can be a welcome part of your financial and estate plans.