The American Red Cross offers the suggested maximum charitable gift annuity rates published by the American Council on Gift Annuities (ACGA). The ACGA increased its suggested maximum annuity rates, effective January 2023. For most charitable gift annuities, the new rates are 0.1% - 0.4% higher than the previous rates.
Examples of Increased Annuity Rates
The figures in the table below show how the new rates and resulting charitable deductions for a $10,000 charitable gift annuity differ from the old rates and deductions over a range of common annuitant ages.
Comparison of Previous and New ACGA Rates ($10,000 contribution)
Previous Rates | New Rates | |||
---|---|---|---|---|
Age(s) | Annuity | Deduction | Annuity | Deduction |
65 |
$470 |
$4,748 |
$480 |
$4,636 |
75 |
$580 |
$5,352 |
$600 |
$5,191 |
85 |
$800 |
$5,977 |
$810 |
$5,927 |
65/65 |
$420 |
$4,335 |
$430 |
$4,200 |
75/75 |
$500 |
$4,877 |
$520 |
$4,672 |
85/85 |
$690 |
$5,305 |
$690 |
$5,305 |
You can see that the new gift annuity rates result in a somewhat smaller charitable deduction. This is because the amount of the annuity is larger. If you wish to maximize the value of your contribution to the American Red Cross, you can choose a smaller annuity, however, bear in mind that once you have selected your annuity amount it cannot be changed.
Deferred Gift Annuity Rates Increased More than Immediate Annuity Rates
A deferred gift annuity allows you to defer the date you receive your first payment for one or more years. The Red Cross can offer a larger annuity amount for a deferred gift annuity because the first payment is deferred for a number of years after the contribution. The figures in the table below show how the ACGA suggested rates for a deferred gift annuity have changed for a 60-year-old deferring the first payment for various periods of time.
Deferred Gift Annuity Rates Increased More than Immediate Annuity Rates
Previous Rates | New Rates | |||
---|---|---|---|---|
Age at First Payment | Annuity | Deduction | Annuity | Deduction |
65 |
$480 |
$6,017 |
$570 |
$5,270 |
70 |
$610 |
$6,862 |
$740 |
$6,194 |
75 |
$810 |
$7,632 |
$1,000 |
$7,076 |
As with the immediate payment charitable gift annuity, the new rates result in a smaller charitable deduction because the amount of the annuity paid to you is larger. Choosing a smaller annuity will increase the value of your contribution to the American Red Cross, but once you have selected your annuity amount it cannot be changed.
Conclusion
A charitable gift annuity – with payments beginning either immediately or at some time in the future – is a wonderful way to support the American Red Cross while securing a stream of payments for your or someone else. We would be happy to provide an illustration tailored to your specific circumstances.