Lower Your Taxes and Increase Your Income
Posted in Uncategorized on April 15 2009, by Plant Talk
How? With a Gift Annuity to the Garden
Paul Parvis is Manager of Planned Giving.
Taxes need not be so— taxing.
The key is to plan ahead. My wife and I managed another year of preparing our tax returns, and we did so by revisiting our financial strategies soon after completing our taxes at this time last year. We kept thinking of five criteria: earnings, tax withholdings, deferred retirement savings amount, charitable giving, and lastly, what we owed! Increasing our retirement savings and charitable giving last year significantly reduced the tax amount due this year.
Enter the gift annuity—the gift that gives twice.
With a gift annuity, you irrevocably transfer cash or stock in exchange for an immediate tax deduction and guaranteed annual payments for life. For a cash transfer of $10,000, for example, a 65-year-old person would receive $530 per year of which $351 would be exempt from personal income tax for an effective rate of 7.3 percent.
To learn more about gift annuities…
Annuity distribution rates often exceed dividend and CD interest rates combined and they usually surpass commercial or conventional annuity payout rates now ranging between 3 and 4 percent. Unlike commercial annuities or CDs, much of the gift annuity payout is exempt from personal income tax. Once you establish an annuity relationship, “locked in” payout rates will not change in the future, no matter how susceptible the market is to an economic decline. In addition, you receive a tax deduction in the year you fund your annuity.
Other advantages to bear in mind are that The New York Botanical Garden annuities do not involve commissions and they are not assessed maintenance or investment fees. In addition, you can feel secure in establishing a gift annuity at the Garden—the New York State Insurance Department regularly audits The New York Botanical Garden’s reserves, which meet or exceed mandated funding levels.
When you establish a gift annuity at the Botanical Garden, you are providing not only for your own future but for the Garden’s future as well. The Garden benefits immediately from the charitable portion of the total annuity, which is usually about 40 percent.
My retirement strategy will include “laddering” gift annuities to take advantage of payout rates and tax deductions that increase with age. Funding an annuity every few years will accomplish the goals of enhancing income and minimizing taxes that much more. Several Garden Members presently subscribe to this strategy, and each has funded as many as six or seven annuities over 10 to 20 years.
Gift annuities can significantly boost your income and leverage charitable giving at the same time. They may benefit either one or two people: husband and wife, partner, nieces, nephews, aunts, uncles, or parents. A gift annuity is also an excellent way to provide for others who lack either the experience or the capability to manage money in retirement.
A transfer of cash or securities as well as an easy-to-understand two-page agreement with the Garden, will establish an annuity. Once you invest in the Garden’s future with this or any other legacy gift, you will be cordially invited to join the Botanical Garden’s legacy group, the Perennial Society. As a Perennial Society Member, you will enjoy exclusive benefits such as special invitations to The Orchid Show and Holiday Train Show openings and participation in Continuing Education courses, Members’ bus trips, and curator-led tours.
To learn more about additional gift annuity advantages or other legacy gift options, call the Office of Planned Giving at 718.817.8545 or e-mail me at pparvis@nybg.org. You may also want to experiment with the gift illustrator tool on our Web site. The criteria you enter can be entirely anonymous, and you can send your illustration to a family member or your financial planner.
The above is intended to illustrate the advantages of a charitable gift annuity and is not intended as personal advice. You should consult your financial planner or accountant regarding any estate-planned strategy.
