A commuted payment gift annuity is a form of deferred gift annuity. Instead of setting a fixed date in the future for the start of payments for the rest of your life, as you would with a deferred gift annuity, you select a set date to start payments but then all of the payments you would have received for life are "scrunched up" into a period of years.

Yes. When you sign your commuted payment gift annuity contract, you have to decide when the payments will start and for how long you want them to last. The amount of your payment will be determined by the length of the deferral period and how long you want the payments. For example, if you defer payments for a long time and then spread out the payments over just a few years, then you will get some very high payments. But if you only defer payments for a year or two and then spread payments over 25 years, then the payments will be much less.

Just as with deferred gift annuities, payments from commuted payment gift annuities are taxed based upon the assets used to fund the gift annuity. For example, if you fund a commuted payment gift annuity with cash, a portion of each payment is taxed at ordinary income tax rates and a portion is tax-free return of principal. However, when funded with appreciated stock, a portion of each payment is taxed as ordinary income, a portion as capital gain, and a portion is tax-free return of principal. We can help you to determine the taxation for your particular gift. Note that because you are spreading the capital gain over fewer years, a larger percentage of each payment may be taxed as capital gain if you use appreciated stock to fund your commuted payment gift annuity.

A commuted payment gift annuity can be used for any purpose when you might want larger payments for a short period of time. They are most commonly used to help fund early retirement. Many individuals elect to retire prior to full retirement age for Social Security. The commuted payment gift annuity can make payments for the years from early retirement until full Social Security eligibility, then stop. Some individuals also use the commuted payments to help pay for college for grandchildren.

A commuted payment gift annuity is a simple contract between you and Heritage Christian Services. Once the contract is executed, you do nothing until you start receiving payments. Each year, we issue a Form 1099 showing how the payments are taxed, which should be shared with your tax preparer. When the annuity ends, any amounts remaining are put to use for our charitable mission, as you have directed. Because it is payable for a term of years, you get to see the benefit of your philanthropy while you are living, which makes the commuted payment gift annuity unique among gift annuities, which otherwise are paid for life.