Charitable Gift Annuities (CGAs)

With a CGA, you can make a gift and receive a guaranteed stream of fixed income payments for life.

You may find that one or more CGAs can be a rewarding part of your retirement plan. Consider the following:

  • You can implement a CGA with a modest contribution of cash, stocks, or mutual funds.
  • You can elect a payment arrangement that is convenient for you (typically, annually or quarterly).
  • You qualify for an immediate income tax charitable deduction for the gift part of the transaction (not the annuity part of the transaction), subject to AGI limitations.
  • If you fund the CGA with appreciated assets, you may be able to spread out capital gains tax liability.
  • Part of each annuity payment may be income tax free.
  • You can count on and plan for a lifetime income stream for yourself and/or a loved one (two people max).

The payment amount is based on:

  • The amount of the gift (higher gift amount = higher payment amount)
  • The age(s) of whoever will be receiving the payments (older annuitants = higher payment amount)
  • When payments will begin (deferring the start of payments = higher payment amount)
  • The current rates for charitable gift annuities

Sample one-life gift annuity rates, effective January 1, 2024.

Age

70

75

80

85

90

Rate

6.3%

7.0%

8.1%

9.1%

10.1%

Rates are subject to change. Contact us to verify the rate for your age.

Evaluate the fit.

CGAs may be a particularly good option to consider if you:

  • Are retired or near retirement
  • Want to establish a source of fixed income payments to supplement other income streams in retirement
  • Want to establish a source of fixed income for a loved one
  • Could use a current charitable income tax deduction
  • Would like to get rid of appreciated assets but don’t want to pay the associated capital gains tax
  • Are at least 70 years old and comfortable funding the CGA with a minimum of $100,000 (except in Montana where the minimum is $10,000 and age is evaluated on a case-by-case basis).
  • Are an IRA owner age 70½ or older who wishes to make a one-time distribution to create a CGA
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See how it works.

Susan makes an irrevocable gift of appreciated stock using a charitable gift annuity. In return, Intermountain Foundation agrees to make lifetime annuity payments to Susan based on her age, the gift annuity rate, and the gift amount. Susan enjoys favorable taxation—part of each payment is tax-free return of principal, part is long-term capital gain, and the remainder is taxed as ordinary income.

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Deferred gift annuities (Montana taxpayers only)

Available to Montana taxpayers only, the deferred gift annuity is an easy way to make a gift now but start receiving payments at a specified future date. You can time payments to retirement while locking in a higher income payment compared to an otherwise-similar immediate CGA.

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  • You select a payment start date at least one year in the future.
  • Your gift still qualifies for an immediate income tax deduction.

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Example

Andy (age 71) is a lifelong Billings resident and a Montana taxpayer. He doesn’t need additional income right now, but he would like to reduce his current income tax liability and supplement his future retirement income. He selects a deferred charitable gift annuity. He makes an irrevocable gift, and in return, Intermountain Foundation agrees to make lifetime annuity payments to Andy beginning in 10 years. Delaying the start of payments increases his annuity income and qualifies for a larger tax deduction.

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FAQ: The Montana Endowment Tax Credit

The Qualified Endowment Credit, or Montana Endowment Tax Credit, was created to encourage gifts to endowments supporting Montana charities. Any individual or business that pays income taxes to the State of Montana is eligible to take advantage of this credit. Donors must make a qualified planned gift to a permanent endowment for the benefit of a charitable 501(c)(3) nonprofit organization. (Businesses may make a cash gift along those same lines.)

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What’s the maximum credit?

The credit is 40% of the planned gift's federal charitable deduction value, up to a maximum of $15,000 per individual or $30,000 per couple. For businesses, the credit is calculated at 20% of the value of the gift, up to a maximum of $15,000.

Why is this a big deal?

While a tax deduction lowers your taxable income, a tax credit reduces the state income tax you owe. With this type of planned gift, a $15,000 tax credit will save you $15,000 in taxes.

Which planned gifts qualify?

  • Charitable Gift Annuities
  • Deferred Charitable Gift Annuities
  • Charitable Remainder Unitrusts
  • Charitable Remainder Annuity Trusts
  • Pooled Income Fund Trusts
  • Charitable Lead Trusts
  • Charitable Lead Annuity Trusts
  • Charitable Life Estate Agreements
  • Paid-up Life Insurance Policies

Can I carry over unused credits?

No. The credit is only available in the year you make your planned gift. If you are unable to use the full credit in that year, there is no carry-forward or carry-back.

Can I make an endowment gift multiple years in a row?

Yes! You may qualify for the Montana Endowment Tax Credit every year you make a qualified gift.

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Consider your timing.

If you want to qualify for a charitable deduction this year, you should have the CGA application and contribution to us by Friday, December 13, 2024.

We can help.

We can provide you with one or more complimentary illustrations to help you estimate your deduction, your income payment amount, and your tax impact.

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Colin Ware Cfre Mba

Contact Us

Colin Ware, CFRE  MBA
Foundation Gift Planning Officer
Intermountain Foundation

C: 303-257-2082