Cga Calculation

Charitable Gift Annuity (CGA) Calculator

Use this calculator to estimate the potential annual payments and charitable tax deduction for a Charitable Gift Annuity (CGA). A CGA allows you to make a gift to a charity and, in return, receive fixed payments for life. The calculation involves several factors, including your age, the gift amount, and prevailing annuity rates.

Understanding Charitable Gift Annuities (CGAs)

A Charitable Gift Annuity (CGA) is a popular planned giving option that allows you to make a significant gift to a non-profit organization while simultaneously receiving a stream of fixed income payments for the rest of your life, or for the lives of two annuitants. It's a contractual agreement where you transfer assets (cash, securities, etc.) to a charity, and in return, the charity agrees to pay you (and/or another beneficiary) a fixed amount annually.

Key Benefits of a CGA:

• Fixed Payments for Life: You receive predictable, regular payments that are guaranteed for your lifetime, regardless of market fluctuations.
• Tax Deduction: A portion of your gift is immediately tax-deductible as a charitable contribution.
• Reduced Capital Gains Tax: If you fund your CGA with appreciated assets (like stocks), a portion of the capital gains tax can be deferred and spread over your lifetime payments.
• Support for a Cause: You get the satisfaction of knowing your gift will ultimately benefit a charity you care about.

How CGA Payments and Deductions are Calculated:

The calculation of your annual annuity payment and the charitable tax deduction involves several key factors:

1. Gift Amount: The total value of the assets you contribute to the charity.
2. Annuitant's Age(s): The age(s) of the person(s) who will receive the payments. Generally, older annuitants receive higher annuity rates because their life expectancy is shorter.
3. ACGA Annuity Rate: The American Council on Gift Annuities (ACGA) publishes recommended maximum annuity rates. These rates are based on age and are designed to ensure the charity receives a substantial gift while providing a reasonable return to the annuitant. The annual payment is directly calculated by multiplying your gift amount by this rate.
4. IRS Section 7520 Rate: This is a monthly interest rate published by the IRS, used for valuing various charitable gifts, including CGAs. It significantly impacts the calculation of your charitable deduction.
5. IRS Annuity Factor: This factor, derived from IRS actuarial tables (Publications 1457 for one-life annuities and 1458 for two-life annuities), is crucial for determining the present value of the annuity payments. The charitable deduction is calculated by subtracting this present value from your original gift amount. The factor depends on the annuitant's age(s) and the IRS Section 7520 rate.

Using the Calculator:

To use this calculator, you will need to input:

• Gift Amount: The dollar amount you plan to donate.
• Annuitant 1 Age: Your age (or the primary annuitant's age) in years.
• Annuitant 2 Age (Optional): If it's a two-life annuity, enter the second annuitant's age. Leave blank for a single-life annuity.
• ACGA Annuity Rate: Look up the current recommended ACGA rate for your age(s) on the ACGA website.
• IRS Annuity Factor: This factor is more complex to find. It's based on your age(s) and the IRS Section 7520 rate for the month you establish the annuity. You can find it in IRS Publication 1457 or 1458, or obtain it from a financial advisor or the charity you are working with.

The calculator will then provide an estimate of your annual annuity payment and your potential charitable tax deduction.

Important Disclaimer:

This calculator provides estimates for illustrative purposes only. It is not intended as financial, tax, or legal advice. The actual annuity payments and charitable deduction may vary based on specific terms, actual IRS rates, and individual circumstances. Always consult with a qualified financial advisor, tax professional, or the charity's planned giving office before making any financial decisions.

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