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Deferred Gift Annuity

Complete Gift Description

This version of the charitable gift annuity is especially designed for younger donors. Called the deferred gift annuity, it makes fixed annual payments to you and/or another beneficiary for life, with payments commencing at a future date. Because of the deferral of income:

  • The MU Foundation can offer a higher income rate for these annuities than for annuities whose income starts immediately, and
  • You may receive a larger charitable income tax deduction than you could get from any other life-income gift plan.

These two features make the deferred gift annuity quite attractive to donors in high-earnings years who are concerned about securing both current tax deductions and additional sources of retirement income.

Is there a way to use the deferred gift annuity as a retirement planning device?

Many donors establish a series of deferred annuities over several years, using funds they had already set aside for retirement saving. They set the commencement date for payments from these annuities to coincide with their or their spouse's retirement.

And this is permissible?

It certainly is – to help individuals ultimately support the charities that are important to them – like the MU Foundation. The deferred gift annuity offers the same benefits of simplicity, security, and attractive income taxation that the regular gift annuity provides our donors:

  • Your deferred annuity is a contract between The Marshall University Foundation, Inc. and you, and your annuity payments are an obligation backed by our corporate assets;
  • You secure a charitable income tax deduction based on the market value of the assets you contributed, minus the present value of the life-income interest you retained;
  • No up-front capital gains tax is payable if you fund your deferred gift annuity with appreciated securities; only a portion of your gain is reportable over your annuity payments;
  • Part of each annuity payment to you comes tax-free as the return of principal;
  • The balance remaining in your deferred annuity after the death of the beneficiaries will be used by the MU Foundation for the purpose you designated when you created the gift annuity.

Are there any restricions to making this type of contribution?

The minimum age for a donor of a deferred gift annuity is 45 years. To protect everyone's interest, we have determined that a deferred annuity may be created with a gift of 10,000 or more.

How do you create a deferred gift annuity?

We will provide a draft of the deferred gift annuity agreement for review by you. As always, we encourage you to seek the advice of your attorney or financial adviser. We'd be happy to share additional material with them.