Charitable Gift Annuity

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DEFINITION of 'Charitable Gift Annuity'

A type of gift transaction where an individual transfers assets to a charity in exchange for a tax benefit and a lifetime annuity. As with any other lifetime annuity, when the beneficiary dies, the annuity payments are stopped, and the charity retains the remaining funds. In a typical charitable gift annuity, the annuity payouts are not limited to the contributed assets, however the actuarial calculations establishing payout amounts usually provide that a large residual amount should remain for the charity after the beneficiary's death.

BREAKING DOWN 'Charitable Gift Annuity'

Charitable gift annuities are popular fundraising vehicles. The annuities simultaneously provide a charitable donation, an income tax deduction and a guaranteed lifetime income stream. The charitable donation tax deduction is limited to the amount contributed to the annuity in excess of its present value, as calculated using IRS parameters.

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RELATED FAQS
  1. What are the best ways to sell an annuity?

    The best ways to sell an annuity are to locate buyers from insurance agents or companies that specialize in connecting buyers ... Read Full Answer >>
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    Non-qualified variable annuities are tax-deferred investment vehicles with a unique tax structure. After-tax money is deposited ... Read Full Answer >>
  3. Can a variable annuity be rolled into an IRA?

    You can roll qualified variable annuities, such as other qualified retirement plan accounts, into a traditional IRA. Non-qualified ... Read Full Answer >>
  4. Can I put my IRA in a trust?

    You cannot put your IRA in a trust while you are living. You can, however, name a trust as the beneficiary of your IRA and ... Read Full Answer >>
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    Variable annuities are insurance contracts that provide tax-deferred growth of assets that can later generate a guaranteed ... Read Full Answer >>
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