It Is Never Too Early to Plan for Retirement
By John Young, Class of 1986
My wife, Sheila, and I had been looking at annuities for a few years prior to establishing our gift annuity with Colorado College. We liked the idea of setting aside money for the future to complement the typical tax beneficial ways to save for retirement—IRA, 401(k), etc. It was also important to us that this be an attractive after-tax opportunity.
In our research, we read materials by investment managers and accountants, and we consulted with former colleagues. We analyzed the economics of fixed and variable commercial annuities. We concluded that the after-tax return of charitable gift annuities compares favorably with those alternatives. The real kicker is that by creating a gift annuity we benefit a worthy cause.
Choosing CC was easy. It immediately came to mind because of my rewarding experience and the knowledge that colleges always have a long-term need for funding. When we contacted CC, we learned that it not only had a gift annuity program in place, but had many other planned giving alternatives as well. At the Development Office's suggestion, we chose a flexible deferred charitable gift annuity, which includes a current tax deduction and the ability to receive larger payments on a date we select in the future.
Funding Our Gift
An important aspect to the gift annuity was the ability to donate highly appreciated property—in our case, shares of stock. In effect, we escaped paying upfront capital gains taxes by donating the shares directly rather than selling the stock and donating the proceeds. Credit considerations also played a part, as gift annuities are long-term gift arrangements. We are confident our gift annuity is secure at Colorado College, an institution with an Aa3 bond rating.
A True Win-Win
The transaction was both an acquisition of a gift annuity and a charitable contribution. After the details were decided, we began to consider how best to direct the donation. We discussed the importance of international experience and the success of my time working and studying abroad. To promote similar opportunities and to help generate income for expenses associated with exchange programs, we established the John R. Young 1986 and Sheila M. Collopy Endowed Fund for Study Abroad. It is just a win-win situation all the way around!
The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results. Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.