Traditional vs charitable annuities

Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date Traditional vs charitable annuities Chip 01-06-2010  Re: Traditional vs charitable annuities Ron Peterson 01-06-2010  Re: Traditional vs charitable annuities Ron Peterson 01-07-2010  Re: Traditional vs charitable annuities Don 01-07-2010  Re: Traditional vs charitable annuities Ron Peterson 01-08-2010  Re: Traditional vs charitable annuities Don 01-08-2010  Re: Traditional vs charitable annuities Douglas Johnson 01-08-2010  Re: Traditional vs charitable annuities Don 01-08-2010  Re: Traditional vs charitable annuities Douglas Johnson 01-08-2010  Re: Traditional vs charitable annuities Don 01-08-2010  Re: Traditional vs charitable annuities Ron Peterson 01-08-2010  Re: Traditional vs charitable annuities rick++ 01-07-2010  Re: Traditional vs charitable annuities bo peep 01-07-2010  Re: Traditional vs charitable annuities Chip 01-07-2010  Re: Traditional vs charitable annuities Douglas Johnson 01-07-2010
Posted by Chip on January 6, 2010, 4:32 pm As I understand it, traditional annuities with INS companies, pay me and my spouse an amount per month until my (our) deaths and then they keep whatever is left over. With a charitable annuity at comparable interest rates, same thing and it still may be thru an INS company, but I get an immediate tax write-off (expected amount that's left), I get a continuing tax write-off each year, and the charity gets to keep the amount left. If this is true, why would I ever go with a traditional annuity? I would be funding it with a 401(k) rollover. Chip Posted by Ron Peterson on January 6, 2010, 7:19 pm > As I understand it, traditional annuities with INS companies, pay me and > my spouse an amount per month until my (our) deaths and then they keep > whatever is left over.  With a charitable annuity at comparable interest > rates, same thing and it still may be thru an INS company, but I get an > immediate tax write-off (expected amount that's left), I get a > continuing tax write-off each year, and the charity gets to keep the > amount left. That's not quite how annuities work. A charitable annuity funded from an IRA would have to pay taxes on the withdrawal from the IRA. > If this is true, why would I ever go with a traditional annuity?  I > would be funding it with a 401(k) rollover. An immediate annuity for a 70 year old would pay about 8.6%, but a charitable annuity would be 5.7%. Don't fund an annuity with non-taxable accounts. Use taxable accounts and then you can depreciate the cost for tax purposes. Lifetime annuities have a higher payout when interest rates are high, so don't buy one. -- Ron Posted by Ron Peterson on January 7, 2010, 3:27 pm > Lifetime annuities have a higher payout when interest rates are high, > so don't buy one. Should be: Lifetime annuities have a higher payout when interest rates are high, so don't buy one now. -- Ron Posted by Don on January 7, 2010, 3:37 pm > >> Lifetime annuities have a higher payout when interest rates are high, >> so don't buy one. > > Should be: Lifetime annuities have a higher payout when interest rates > are high, > so don't buy one now. I could be wrong, but I understand there is a time lag between the movement of interest rates and lifetime annuity payouts. So, if interest rates go up to 8%, say, in a few more years, it may be another year or so after that before the annuity payouts catch up. Posted by Ron Peterson on January 8, 2010, 12:55 pm > > Should be: Lifetime annuities have a higher payout when interest rates > > are high, > > so don't buy one now. > I could be wrong, but I understand there is a time lag between the > movement of interest rates and lifetime annuity payouts. So, if > interest rates go up to 8%, say, in a few more years, it may be another > year or so after that before the annuity payouts catch up. In that case it may pay to wait. Anybody know of a calculator that will calculate net present value of an immediate annuity based on an interest rate and a person's sex and age? -- Ron Similar Threads Posted How to start a charitable foundation in USA October 19, 2006, 4:59 am Using the Charitable Gift Fund December 13, 2007, 10:10 pm SEP IRA vs. Traditional IRA November 28, 2006, 10:58 am Roth vs. Traditional Drawdown June 26, 2007, 9:50 am Roth vs Traditional 401k July 10, 2007, 4:48 pm non-deductible contributions to a Traditional IRA April 7, 2009, 10:29 am Re: Contribute to Traditional vs Roth IRA?? March 29, 2005, 1:40 pm Contribute to Traditional vs Roth IRA?? March 26, 2005, 2:13 pm Question about deductibility of Contribution to Traditional IRA February 24, 2007, 2:12 pm 401k rolled into a Roth IRA or traditional ira? November 5, 2007, 4:58 pm