Quote:
Originally Posted by LuvtheVillages
Yes, you get a good tax deduction (if you itemize) in the first year.
You also get to support a cause that is important to you.
And you don't have to think again about how to invest this money. So your life is simplified.
Anyone thinking about this strategy should talk to their CPA/tax accountant before proceeding.
|
As an alternative, you could deposit the $100,000 into an S&P 500 index fund, which historically will earn an average 8 percent return, or $8,000. Each year, you can withdraw $4,300 for yourself and donate the remaining $3,700 to the charity. That way, you will get a tax deduction every year, and, at the end of 20 years, you will have donated $74,000 to the charity and still have your initial $100,000 to leave to the charity or to your heirs. You will also have saved the charity the expense of paying for the annuity and the associated fees. Note that, with the gift annuity, a large portion of your initial donation will need to be paid out by the charity to purchase the annuity, so they won't actually receive anywhere near the amount you donate.