Create Income with Giving
Looking for a way to generate extra income during your retirement years while continuing to support Carnegie Mellon University?
A variety of options such as a charitable annuity, charitable trust or gift to a pooled income fund might fit the bill. These options provide you with payments for life, help you reach your retirement and inheritance goals and show your love of the Tartan community.
The Office of Gift Planning team is happy to provide personalized examples of how any of these gifts might work for you and support CMU for generations to come.
This option is a simple and straight-forward agreement between you and Carnegie Mellon University. In exchange for a gift of cash or appreciated assets, you receive fixed payments for life.
Why Choose a Charitable Annuity?
- CMU pays up to two beneficiaries of your choice a set amount for life.
- You can provide a beneficial gift to a specific area, program or initiative of your choice.
- You receive fixed annual payments — no matter what happens in the market.
- You receive an immediate income tax deduction for a portion of your gift.
- A portion of your payment may be tax-free for a number of years.
Types of Charitable Annuities
Immediate: You or your chosen beneficiaries immediately start receiving a fixed payment for life, some of which may be tax free.
Deferred: After a specific date, CMU will begin to pay up to two annuitants of your choice, fixed annuity payments for life — at a time when you may most want additional cash flow such as in retirement.
Flexible: You select a range of dates in the future when you want CMU to begin paying fixed payments to you or up to two annuitants of your choice. This is similar to Social Security payments in that the longer you wait, the higher the payment.
With a charitable trust, more specifically a charitable remainder trust, you can pursue your philanthropic goals in support of CMU while still generating income for you and your loved ones.
Your trust is highly customizable and can be designed to financially support as many people as you wish and eventually benefit multiple charities. It can be a particularly attractive planning tool for gifts of hard-to-value assets that have greatly appreciated in value over the years, such as real estate and closely held business interests.
How Does a Charitable Trust Work?
- You choose your payments — a fixed annuity each year, a variable amount based upon the value of the trust or other creative options.
- You choose your beneficiaries — the people you wish to receive ongoing income.
- You choose your charities such as CMU and other organizations or priorities who will eventually receive the remaining value of the trust.
- You choose your trustee, which may include a bank or trust company, a trusted individual, yourself or possibly Carnegie Mellon University, to invest and administer the trust.
- You enjoy an immediate income tax deduction for a portion of your contribution, and your assets are transferred to the trust, free of capital gains tax.
Additional Information on Charitable Trusts
- Assets of your trust are not included as part of your estate. Establishing this type of trust in your will may help reduce estate taxes.
- Funding a charitable trust with retirement assets may allow your heirs to “stretch” their required payments over their lifetimes rather than the IRS-mandated 10-year window for inherited IRAs.
- All assets transferred and sold within the trust do not trigger capital gains tax. This is particularly attractive when selling a highly appreciated asset such as a business or a long-term investment.
Types of Charitable Trusts
Annuity: An annuity trust pays you the same dollar amount each year that you choose at the start. Your payments remain unchanged for life, regardless of fluctuations in trust investments.
Unitrust: A unitrust pays you a variable amount yearly based on a percentage of the value of the trust assets. The amount of your payments is recalculated annually. If the value of the trust increases, so do your payments.
Pooled Income Fund
A pooled income fund offers you variable income today with an opportunity for future growth — making it an attractive retirement planning tool for younger donors wishing to create a future impact.
Why Choose a Pooled Income Fund?
- Similar to a mutual fund, the fund issues you units and pays annual income for up to two beneficiaries for life.
- Your annual income payments often exceed current dividend payments.
- It can be useful for a one-time gift or for making smaller periodic contributions to increase your retirement interest in the fund over time.
- You may enjoy immediate tax savings and deductions on the assets you give to CMU.
- It may offer a significantly larger upfront tax deduction than other life income gifts.
This information is for illustration purposes only and should not be considered legal, accounting or other professional advice. Please consult with your personal legal, tax and financial counsel prior to making a charitable gift.
The Warner Circle
If you’ve made a life income gift to Carnegie Mellon or have named CMU in your estate plans, the university is proud to welcome you as a member of The Warner Circle donor recognition society. Let us know you’ve included CMU in your estate or financial plans by filling out our online form.
Contact Gift Planning by phone: 412-268-5346