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Megan C
Megan C , Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16539
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Our church gave our Pastor 13K to be put in an annuity for

Resolved Question:

Our church gave our Pastor 13K to be put in an annuity for him to take with him when he retires in 2-3 years. As the owner the church can take money out whenever it wants. However, there is an 8 year surrender period with this contract. Right now we are in the 2nd year of the contract, so the withdrawal charge is 8%. This diminishes as time passes. The church (owner) can withdraw 10% of the value per contract year with no withdrawal charges. Anything over that 10% (approximately $700) will be assessed the 8% surrender fee. The church, as the owner, is responsible for that fee. We are going to take out 2K to pay for the Pastors sabbatical.

Should I record the value of the annuity on the church books?

Thanks,

Julia
Submitted: 2 years ago.
Category: Finance
Expert:  Megan C replied 2 years ago.

Megan C :

Thanks for your question and thanks for using JustAnswer.com

Megan C :

Yes, you should record the value of the annuity on the church's books, Julia

Megan C :

Then, as your pastor vests, you will write off the cost of the asset as a compensation expense

Megan C :

Do you have any further questions? Is there anything else I can assist you with today?

Megan C and other Finance Specialists are ready to help you
Expert:  Megan C replied 2 years ago.
Thanks for allowing me the opportunity to help you. Please let me know if I can be of any further assistance to you in this matter. I really enjoyed working with you – please feel free to request me again when you come back to ask another question. Simply enter "MyVirtualCPA" in the subject of your question Thanks again for being a JustAnswer customer