June 6, 2022

Retirement is a sweet word. And for most of us, it’s one we dream about from the time we graduate and realize that our professional careers—even if we love what we do—are still work. Hard work. But as we draw closer to that glorious day of workforce freedom, we have new concerns: How will we fund the lifestyle we’ve been dreaming of for the past 40 to 50 years? Suddenly, those early morning tee times and fruity umbrella drinks on the beach don’t seem within our reach.

If you’ve consciously planned for your future, chances are that you are in a solid place financially. But let’s be honest, extra cash during retirement makes us all feel a little more secure.

If you have cash or appreciated securities that are not yielding a desirable return, a charitable gift annuity (CGA) may be the perfect solution to make extra cash, while planning a future gift to support your passions at Texas A&M University. It also removes assets from your taxable estate—a goal for many. Let’s explore just how this gift works and how it pays you and your favorite university.

How a Charitable Gift Annuity Works

  1. You contact the Texas A&M Foundation Office of Planned Giving to discuss your Aggieland passions and available assets to fund a CGA. Our professionals provide you a customized gift illustration showing you the benefits and outcomes of your proposed gift annuity.
  2. Our team meets with you to review your personalized gift annuity illustrations, discuss alternative options and further explore your campus passions.
  3. Once the gift’s terms are finalized, the Texas A&M Foundation prepares your contract, which you can review with your advisors before signing.
  4. You sign the gift annuity contract and transfer your assets to the Foundation. Assets can include cash or appreciated securities valued at $10,000 or more. Your gift is now complete!
  5. The Foundation invests your gift and begins paying annual, fixed payments to you and/or a loved one for the rest of your lives. The payment amount received is based upon your (or the beneficiary’s) age.
  6. The Foundation’s team will provide you with follow-up information to help you report your gift to the IRS and claim the appropriate tax deductions.
  7. After your life, the remainder of your gift will support your Aggieland passions.

How You Benefit

  • Immediate income tax deduction
  • Fixed payments for life for you or a loved one
  • Tax-free portion of gift annuity payments
  • Capital gains tax savings if you give appreciated assets

Charitable Gift Annuity Scenarios

For a regular CGA:

Mrs. Agatha Maroon is 75 years old and funds a gift annuity of $100,000. Her fixed payment rate is 5.4%, giving her an annual payment of $5,400 (with $3,888 tax-free!). She also receives a charitable deduction of $51,382.18 and knows the remainder of her gift will support Aggieland after her lifetime.

For a deferred CGA:

Mr. and Mrs. Aggie are both 65 years old and planning for retirement. They fund a deferred gift annuity with $100,000 and receive an immediate charitable deduction of $28,963.94. They set a 15-year window in which they can begin to receive payments. The following demonstrates the increase they will receive in their fixed payout rate if they wait longer to receive payments:


What is a charitable gift annuity?

A CGA is a contract between a charity and a donor in which the charity agrees to make fixed payments to one or two annuitants for their lifetimes. In exchange, the donor gifts the charity cash or appreciated securities that the charity invests.

How are payments determined?

The Texas A&M Foundation offers the annuity rate recommended by the American Council on Gift Annuities based on the age of the annuitant(s). The annuity rate increases with age, and the rate for one annuitant is generally higher than for two.

Can a gift annuity make payments to more than one person?

Yes. A gift annuity can be established for one or two people, and you can designate any person as your annuitant. If you designate someone other than yourself or your spouse as the annuitant, please consult with your advisors about possible capital gain and gift tax consequences.

Do payments fluctuate?

No. The gift annuity payment amount is fixed at the time the annuity is created.

Can I fund more than one annuity?

Yes! Some donors create a new gift annuity every few years. This enables them to receive more income as they age and provide additional support to their Texas A&M passions.

Does a charitable gift annuity sound like a winning solution to you? Our planned giving team would love to visit with you to learn about your Texas A&M passions and walk you through your customized CGA plan. Contact Kevin Westerman '11 below to learn more!