Think twice before donating an annuity contract you own to charity.
It’s not the best move taxwise. You’re treated as receiving taxable income equal to the difference between the annuity’s cash surrender value and your investment in the contract. Say you have a small variable annuity in which you invested $5,000 and it’s now worth $20,000. If you donate it to charity, you’ll have to report $15,000 of appreciation as additional income on your tax return in the year of transfer. You’ll also get a charitable deduction equal to the value of the annuity in most cases. If you donate before age 59½, you will owe the 10% penalty on early distributions.