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Started By
Message
Charitable Annuities
Posted on 10/31/22 at 11:32 pm
Posted on 10/31/22 at 11:32 pm
How do money gurus on here feel about charitable annuities?
Here’s my situation-I have 1000 shares Walmart stock,closed today at $142.33.
My basis is $1.87/share,dividend is $2.24/year,rate is 1.57%
Charitable annuity with wife and myself as beneficiaries would receive $6720/ year(4.8% yield).So,about $4500 more a year over dividends.
Portion of the donation is tax deductible and portion of annuity payment is tax deductible.
Seems like a no-brainer to me,we would recieve $4500 more a year than dividends plus some tax deductions.
If I was to sell any shares have to pay capital gains,diividend rate is crap.
Wife isn’t quite on board with it and I’m not sure why unless she wants to leave it as an inheritance,it just seems like she just can’t fathom letting it go.
It took me a couple years to talk her into buying stock in the first place and I missed out on a couple of splits,which is how I accumulated as much as I did.
Here’s my situation-I have 1000 shares Walmart stock,closed today at $142.33.
My basis is $1.87/share,dividend is $2.24/year,rate is 1.57%
Charitable annuity with wife and myself as beneficiaries would receive $6720/ year(4.8% yield).So,about $4500 more a year over dividends.
Portion of the donation is tax deductible and portion of annuity payment is tax deductible.
Seems like a no-brainer to me,we would recieve $4500 more a year than dividends plus some tax deductions.
If I was to sell any shares have to pay capital gains,diividend rate is crap.
Wife isn’t quite on board with it and I’m not sure why unless she wants to leave it as an inheritance,it just seems like she just can’t fathom letting it go.
It took me a couple years to talk her into buying stock in the first place and I missed out on a couple of splits,which is how I accumulated as much as I did.
3
Posted on 11/1/22 at 7:26 am to LSUA 75
How old are you?
What are your other source of income?
What is your marginal tax rate?
What state are you in?
I think you mean tax-free
Another option is you sell a few shares each year to get the additioal $4500 and you pay long term cap gains rate instead of ordinary income rate.
Most of the clients I have that have done these, they care more about the donation aspect than they do about the income aspect.
What are your other source of income?
What is your marginal tax rate?
What state are you in?
quote:
portion of annuity payment is tax deductible.
I think you mean tax-free
Another option is you sell a few shares each year to get the additioal $4500 and you pay long term cap gains rate instead of ordinary income rate.
Most of the clients I have that have done these, they care more about the donation aspect than they do about the income aspect.
Posted on 11/1/22 at 11:24 am to LSUA 75
Rule of thumb: charitable annuities are good if you have strong desire to make charitable gifts and just want a little gravy of some tax planning as a result of your gift
They almost never make sense from a purely economic sense, however. What the annuity salesmen fail to tell you is what portion of the annual payments from the annuity will be taxable income.
I disagree with your assessment that a portion of the annuity payment is tax deductible.
They almost never make sense from a purely economic sense, however. What the annuity salesmen fail to tell you is what portion of the annual payments from the annuity will be taxable income.
I disagree with your assessment that a portion of the annuity payment is tax deductible.
Posted on 11/1/22 at 9:45 pm to texn
1-I’m 72,wife will be 70 soon.
2-Small pension,S.S.,wife still working part time.About to draw 1’st RMD-$30,000
3-22% bracket.
4-Louisiana
You’re right ,portion of annuity payment is tax free,not deductible.
Mortgage has long been paid off.Both in good health,neither of us take any meds.(I know,that can change)
Wife has no pension,IRA’s low 7 figures.Mine about 1/2 that.
Thinking about it I think I will do Charitable Annuity to Shriner’s Hospital but will wait until wife totally retires (probably 2 more years).
Might not be smartest thing from a financial aspect but it hits me in the gut every time I see their commercials on TV,little children playing piano with their feet because they have no arms and such.
Besides,with the increased payout over Walmart dividend I will surely clear more dollars at the end of the year.
I’ve never spent any of my W-mart dividends, they go into my Asset Management account and I reinvest them in mutual funds,I have other dividends coming also.
I believe we’ll be fine financially,we live a frugal life style.
Thanks to all that responded.
2-Small pension,S.S.,wife still working part time.About to draw 1’st RMD-$30,000
3-22% bracket.
4-Louisiana
You’re right ,portion of annuity payment is tax free,not deductible.
Mortgage has long been paid off.Both in good health,neither of us take any meds.(I know,that can change)
Wife has no pension,IRA’s low 7 figures.Mine about 1/2 that.
Thinking about it I think I will do Charitable Annuity to Shriner’s Hospital but will wait until wife totally retires (probably 2 more years).
Might not be smartest thing from a financial aspect but it hits me in the gut every time I see their commercials on TV,little children playing piano with their feet because they have no arms and such.
Besides,with the increased payout over Walmart dividend I will surely clear more dollars at the end of the year.
I’ve never spent any of my W-mart dividends, they go into my Asset Management account and I reinvest them in mutual funds,I have other dividends coming also.
I believe we’ll be fine financially,we live a frugal life style.
Thanks to all that responded.
Posted on 11/2/22 at 7:40 am to LSUA 75
quote:
Thinking about it I think I will do Charitable Annuity to Shriner’s Hospital but will wait until wife totally retires (probably 2 more years).
Might not be smartest thing from a financial aspect but it hits me in the gut every time I see their commercials on TV,little children playing piano with their feet because they have no arms and such.
When I do tax planning for clients and we talk about charitable contributions I tell them this.
Giving money to charity simply to save taxes is beyond dumb. In you case you are saving 28 cents in tax (22 federal and 6 state - rough numbers) but it's still costing you 72 cents in actual after-tax cash.
But if you get certain non-tax benefits from donating, such as emotional happiness... then the tax deductions from properly strucring donations can be a very nice add-on.
It sounds like a charitable annuity might be a nice way for you to make a donation while you are still alive, and also get a decent cash flow from it.
As far as timing, if you wait until your wife is no longer working, then your marginal tax rate might be lower and you will not get as much benefit from the charitable deduction. Not to mentionm depending on the size of the donation, you might run into AGI limitations which would cause you to have to spread the deduction over multiple years.
This post was edited on 11/2/22 at 7:42 am
Posted on 11/2/22 at 7:52 am to LSUA 75
(no message)
This post was edited on 11/2/22 at 9:20 am
Posted on 11/2/22 at 8:22 am to el Gaucho
Can you take your unfunny arse back to the OT? Please and thank you.
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