Planned Giving News Archives
Early retirement opportunity with planned giving
More and more people are desirous of retiring early, that is, before the traditional retirement age of 65. However, eligibility for certain retirement benefits accrues only when one reaches a certain age. There is also the matter of a 10% penalty for withdrawing funds from an IRA before age 59 ½. Similar restrictions apply to traditional employer-sponsored pension plans. The minimum age to begin receiving Social Security payments is 62, however payments beginning at that age are reduced from the payment forecast at the anticipated retirement age of 65 or later for baby boomers. A person born between 1943 and 1958 must wait until age 65 for full Social Security benefits, and a person born after 1959 is not eligible for full benefits until age 67.
A person seeking to retire before this may face a gap in his or her monthly income until they are eligible for retirement benefits. There is a way to fund this gap in income, and aid charities like George Fox University as well.
One answer may be a commuted or installment payment deferred gift annuity. Most of the gift annuities issued by George Fox are designed to immediately begin making annuity payments to the beneficiaries. A gift annuity provides payments to one or two beneficiaries for life. A deferred payment gift annuity is scheduled to begin making annuity payments at least one year from the date the annuity agreement is established and a gift is made to the university. The deferral of the payment results in a larger charitable income tax deduction and larger payments to the annuitants. A deferred gift annuity is an excellent way to generate supplemental retirement income.
An installment payment deferred gift annuity includes language that gives the annuitant the option to commute the lifetime of payments to a fixed number of payments of equal value. The decision to change the lifetime payments to a series of payments over a fixed number of years (installments) can be made at any time prior to the date of the scheduled first payment.
Although a gift annuity cannot be written for a term of years or guarantee a minimum number of payments, the ILRS has approved gift annuity agreements that permit an exchange of life payments for a series of installments to be received during a limited period of time.
For example, Jack Tompkins is 55 years old and has accumulated sufficient assets in his investments and retirement plan to last for his retirement years. He would like to take early retirement at age 60. He does not become eligible for Social Security until age 62 or full benefits at age 66. He estimates that he would need an additional $50,000 a year until age 66 when he would begin receiving Social Security plus the benefit of his retirement plan.
Jack could fund an installment payment gift annuity with $270,000 in assets from his taxable accounts. Upon his early retirement he will be entitled to an annuity of $50,000 per year for six years. After that the remaining assets become a gift to George Fox University and Jack can begin receiving his Social Security payments and draw from his qualified retirement funds. In addition, Jack will benefit from a substantial income tax deduction of almost $75,000 this year for his charitable gift.
For more information about these and other charitable life income gift plans contact Gene Christian at 503-554-2106 or gchristian@georgefox.edu.
2011-2012 Campaign Progress
70%
$3,782,254 raised this year
out of $5,407,286
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