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Give a Gift, Get a Gift

By Jay G. Smith, Director of Planned Giving


Many of us in the Boomer Generation were able to buy stock in the companies we first went to work for under an Employee Purchase Plan.  In my case I purchased stock and have held on to it for the last 20 years. 

Now as I near retirement, the stock is really not a reliable source of income due to the fluctuations in the market and yet if I sell the stock now I’ll be faced with a whopping capital gains tax.  What can I do?

One way I can turn this stock into a stable source of supplemental income and at the same time, make a gift to R-MA is through a Charitable Gift Annuity (CGA).

Here’s how it works: I enter into a contract with R-MA. In return for my donation of stock, R-MA agrees to pay me a specified fixed amount for the rest of my life.  I pay no capital gains tax so I reap the full value of the stock.  The amount I receive is based on my age at the time I enter into the contract, and the payments will often be much higher than the dividends I was earning.

And here’s the best part: In addition to receiving a federal income tax deduction for the gift to R-MA, most of each annuity payment is tax-free. This effectively increases the yield from my annuity over my life expectancy.

I can decide to start payments the same year I make the contribution (an immediate payment gift annuity), or I can choose to delay payments until a later date (a deferred payment gift annuity). Deferral entitles me to a higher annuity rate and generates a larger charitable deduction.  

If I include my wife in the contract, upon my death, she will continue to receive payments for the rest of her life.  Upon her death, the balance remaining goes to R-MA.  In short, I give a gift and get a gift.

Is a Charitable Gift Annuity right for you?  A gift annuity is for you if…

•    You want to maximize the payments you receive from your planned gift — and you want to lower your income tax on those payments.
•    You want the security of payment amounts that won't fluctuate during your lifetime.
•    You like the idea of supplemental income you can't outlive.

 Give me a call (540) 671-9462 or email me at and I will run through the scenario with you.