Church Retirement Plans for Clergy and Staff

Church retirement plans can be a complex and daunting topic for clergy and staff. Many churches offer retirement plans as a benefit to their employees, but did you know that 70% of churches have fewer than 50 employees, making it challenging to provide comprehensive benefits?

Churches are exempt from the Employee Retirement Income Security Act (ERISA) of 1974, which means they have more flexibility in designing their retirement plans. This is a significant advantage for smaller churches that may not be able to offer traditional pension plans.

Some churches may offer a defined benefit plan, which provides a guaranteed benefit amount to the participant at retirement. However, these plans can be costly and require significant administrative support.

In contrast, defined contribution plans, such as 403(b) plans, are becoming increasingly popular among churches. These plans allow employees to contribute a portion of their salary to a retirement account, with the church often matching a portion of the contributions.

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Church retirement plans offer various options to meet the unique needs of faith-based organizations. One type of plan is designed specifically for churches and qualified church-controlled organizations (QCCOs), which eliminates nondiscrimination testing and reduces regulatory risk.

These plans also eliminate top-heavy testing, ensuring that the plan doesn't disproportionately favor certain officers or owners. This can be a significant advantage for churches looking to provide a fair and equitable retirement plan for their employees.

For Southern Baptist Churches, the SBC Church Retirement Plan is an option, which allows employees who receive W-2 taxable income to enroll. This plan is a great example of a non-ERISA church retirement plan that offers decreased cost, administrative ease, and reduced regulatory risk.

Here are some key advantages of non-ERISA church retirement plans:

Nonqualified Deferred Compensation Plans (NQDC) are another option, allowing organizations to determine which employees may receive an employer contribution and/or contribute on a tax-deferred basis. These plans are particularly useful for individuals who are already maximizing their 403(b) deferrals.

For faith-based organizations, a non-ERISA church retirement plan is a great option. It offers decreased cost, administrative ease, and reduced regulatory risk.

One of the key advantages of a non-ERISA church retirement plan is the elimination of nondiscrimination testing for churches and qualified church-controlled organizations (QCCOs). This means you don't have to worry about complex testing requirements.

If you receive W-2 taxable income from a Southern Baptist Church, you're eligible to enroll in the SBC Church Retirement Plan. This plan is designed specifically for churches and offers a range of benefits.

Here are some additional advantages of non-ERISA church retirement plans:

By choosing a non-ERISA church retirement plan, you can simplify your retirement planning process and reduce your administrative burden.

Deferred compensation plans can be a valuable tool for church employees to save for retirement. GuideStone offers a variety of nonqualified deferred compensation (NQDC) plan options.

With an NQDC plan, your organization has the flexibility to determine which employees may receive an employer contribution and/or contribute on a tax-deferred basis. These plans are particularly useful for individuals who are already maximizing their 403(b) deferrals.

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To be eligible for a church retirement plan contribution, you must be an employee of the church.

The employer gets to choose which employees or groups of employees can participate in the plan.

You can have different amounts of contributions for each person, which is a nice perk.

Eligibility often includes age and service minimums, so be sure to check those requirements.

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The Church Benefits Board 403(b)(9) Retirement Plan offers a variety of investment options.

You can choose from target date funds, risk-based funds, or do-it-yourself options.

For personalized investment advice, you can call Empower at (866) 467-7756 for free.

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If you're a faith-based organization, you might want to consider a non-ERISA plan, which can be a cost-effective and administratively easy option.

These plans are not subject to the rules of ERISA, which means you'll save on audit and testing requirements.

You can choose a plan that suits your organization's needs, such as the SBC Church Retirement Plan, which is available to those who receive W-2 taxable income from a Southern Baptist Church.

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A non-ERISA plan can also provide benefits like universal availability requirements, which replace testing on deferrals, and elimination of top-heavy testing.

Here are some key benefits of non-ERISA plans:

Additionally, non-ERISA plans can offer flexibility in participation, such as universal availability or age and service requirements.

Ministers can also take advantage of a housing allowance, which allows them to receive non-taxable distributions in retirement, and contribute to their plan tax-free.

A Roth 403(b) retirement plan is another option, which allows missionaries abroad to contribute after-tax and receive tax-free growth and distribution.

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The Church Benefits Board 403(b)(9) Retirement Plan offers a variety of investment options.

You can choose from target date funds, risk-based funds, and do-it-yourself options.

To get free investment advice, current participants can call Empower at (866) 467-7756.

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Church retirement plans offer a range of benefits that can help clergy and church staff save for their future. One of the key advantages is participation flexibility, allowing employers to decide which employees can participate in the plan.

Employers can choose to impose age and/or service requirements before an employee can participate, giving them more control over the plan. Ministers with a 403(b)(9) plan can also take non-taxable, ministerial housing allowance distributions in retirement, a significant tax break.

This housing allowance is a huge benefit for ministers, allowing them to contribute to their plan tax-free and receive distributions in retirement tax-free as well. A Roth 403(b) retirement plan is also available, allowing missionaries abroad to contribute after-tax and enjoy tax-free growth and distribution.

Here are some key benefits of a 403(b)(9) plan:

If you're considering a retirement plan, you'll want to know about the benefits of a 403(b)(9) plan. This type of plan offers flexibility in participation, allowing employers to decide which employees can join.

One of the biggest advantages is the housing allowance, which allows ordained, licensed, or commissioned ministers to take non-taxable housing allowance distributions in retirement. This can be a huge tax break.

Pre-SECA tax is another significant benefit, exempting contributions from Social Security tax and income tax, resulting in a 15.3% tax savings. This is a big deal, especially for those who have been contributing to their plan for years.

Administering a 403(b)(9) plan is also less expensive than other types of plans, as it doesn't fall under ERISA regulations. This means no costly audits, form preparation, or testing requirements.

Here are some key benefits of a 403(b)(9) plan:

And, if you're a missionary abroad, you can even contribute to a Roth 403(b) plan, resulting in tax-free growth and distribution. This is a great option for those who want to contribute after-tax and avoid paying taxes on their retirement funds.

The Clergy Housing Allowance is a significant benefit for clergy members participating in a sponsored church plan. This benefit allows you to reduce your taxable income, even after retirement.

A Church Plan, like the Christian and Missionary Alliance 403(b) Retirement Plan, is specifically designed for the unique needs of churches or church organizations. This type of plan offers the housing allowance benefit, which is not available with an IRA or most other plans.

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To be eligible for the housing allowance, your plan must be set up as a "Church Plan" as recognized by the IRS. This means you may be able to claim a ministerial housing allowance on your withdrawals.

Here are some key facts about the housing allowance benefit:

If you're a retired Official Worker, you can claim your withdrawals as Retiree Housing Allowance. This means that if you take $1,000 per month out of your Alliance 403(b) and have $1,000 housing expenses and a fair market rental value of $1,000 or more, the withdrawal is non-taxable income for you.

The housing allowance benefit can be a huge tax break for clergy members, allowing you to keep more of your hard-earned money.

The fee for Church Benefits Board (CBB) and Empower to administer the retirement plan is 77 basis points (bps).

These fees are relatively low, especially when compared to other retirement plan administration costs. The total expense ratio for a majority of our CBB investment options is an average of 96bps, which is still less than 1% of the retirement plan's value.

Fiduciary responsibility is a crucial aspect of plan administration. Church Benefits Board and the Investment/Finance Committee take care of it with this plan.

This means that all fiduciary responsibility for the investment lineup is handled by these two entities.

Fees are an important consideration when it comes to retirement planning. The fee for Church Benefits Board (CBB) and Empower to administer the retirement plan is 77 basis points (bps).

This is a relatively low fee, especially when compared to the total expense ratio for most of our CBB investment options. The average total expense ratio for these investment options is 96bps.

Not all fees are created equal, and it's worth noting that the retirement fees for a majority of our participants are less than 1%.

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You can get free financial planning from Empower's CFP professionals if you're an active participant in the Church Benefits Board 403(b)(9) Plan. They'll help you build a comprehensive financial plan without any extra cost.

Church Benefits Board will add $500 to your Church Benefits Board 403(b)(9) retirement account after you complete your financial plan with Empower. This incentive is available while funds last and is processed on a quarterly basis, with deposits taking up to 90 days.

You can also get personalized financial and retirement savings advice from FINRA licensed advisors at no additional cost. This service is effective immediately and can help with questions about your current investments, housing allowance, rollovers, distributions, and more.

Church Benefits Board partners with Empower to offer personalized financial and retirement savings advice for all plan participants at no additional cost. This value-added service is available to everyone, regardless of their financial situation.

These advisors are FINRA licensed, which means they have the expertise to provide you with robust advice on various financial topics. You can ask them questions about your current investments, housing allowance, rollovers, distributions, and more.

The advice is effective immediately, so you can start making informed decisions about your financial future right away. There's no need to wait or pay extra for this service.

The $500 incentive for completing a financial plan with Empower is available to active participants of the CBB 403(b)(9) Plan. This incentive is funded through generous grant support from Church Benefits Board.

Deposits of the $500 incentive into a participant's Church Benefits Board 403(b)(9) retirement account can take up to 90 days.

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If you're wondering whether your church plan is compliant with federal pension laws, the answer is that almost all church plans are exempt. This means they don't have to follow the same rules as other private retirement plans.

Church pension plans are not required to be covered by the federal pension insurance program, which means your pension could stop if the plan runs out of money.

Church plans can choose to be covered by federal pension laws, but very few do.

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We've received positive feedback about GuideStone from experienced professionals in the field. Barbara Cottrell, Lead Benefits Specialist at the International Mission Board, has spoken highly of the organization.

GuideStone has a strong reputation among its users. Barbara Cottrell's endorsement is just one example of the many positive reviews we've seen.

Having a support system in place is crucial for a smooth plan experience. GuideStone's resources and support have been praised by those who have used them.

Barbara Cottrell's experience with GuideStone is a testament to the organization's effectiveness.

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Retirement planning can seem overwhelming, but it doesn't have to be. One key aspect to consider is participation flexibility, which allows employers to decide who can participate in the plan.

Employers can choose to use universal availability or select specific employees, such as those who meet age and/or service requirements, to participate in the plan. Housing allowance is another benefit, allowing ordained, licensed, or commissioned ministers to take non-taxable housing distributions in retirement from their 403(b)(9) plans.

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This tax break is a huge advantage, especially for ministers who can contribute to their plan tax-free and receive distributions in retirement tax-free. Ministers can also avoid paying Social Security tax and income tax on their contributions, resulting in a 15.3% tax savings.

Here are some key benefits of 403(b)(9) plans:

A Roth 403(b) retirement plan offers another option, allowing participants to contribute after-tax and enjoy tax-free growth and distribution. This is particularly beneficial for missionaries abroad who can contribute to a Roth 403(b) and avoid tax on their contributions when it's time to use them in retirement.

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You can get free financial planning through the Church Benefits Board 403(b)(9) Retirement Plan.

Empower offers this service to active participants of the plan.

One of Empower's CFP professionals will meet with you to build a comprehensive financial plan at no cost.

The plan will cover your overall financial situation, goals, and strategies.

After completing your financial plan with Empower, Church Benefits Board will add $500 to your Church Benefits Board 403(b)(9) retirement account.

This incentive is available while funds last, and deposits are processed on a quarterly basis.

It can take up to 90 days for the $500 to be deposited into your account.

A retirement plan is a defined contribution plan designed for churches or church organizations. It's specifically tailored to meet their unique needs.

Churches can offer a retirement plan to their employees, and Alliance Benefits offers the Christian and Missionary Alliance 403(b) Retirement Plan. This plan is not subject to nondiscrimination rules like other retirement plans would be.

The Alliance plan allows churches to choose which employees are eligible, and even specify match levels for categories of employees. Churches can enroll any W-2 employee paid to work 20+ hours per week.

The plan requires a minimum match for employers, which is the lesser of 50% of the employee's contribution or 3% of the employee's total gross pay, including housing allowance. Many churches prefer to offer a more generous match or even provide additional discretionary employer contributions.

Churches and employees should aim to save at least 15% for retirement, but can start where they can and regularly review their contributions while working toward their retirement goals.

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The U.S. Supreme Court has ruled that pension plans with ties to religious organizations may not have to comply with federal pension law.

This decision leaves hundreds of thousands of people uncertain about whether they'll receive the pensions they earned.

The Supreme Court's ruling essentially punted the issue to lower courts, which will now decide what happens to these pension plans.

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The recent changes to pension plans have left many employees and employers wondering what's next. The Department of Labor has clarified that the fiduciary rule will be delayed until January 2018.

The delay will give employers more time to prepare for the new regulations. The rule will require pension plan fiduciaries to act in the best interests of plan participants.

Many employers are concerned about the impact of the fiduciary rule on their pension plans. The rule will apply to anyone who advises plan participants on investments, including financial advisors and insurance agents.

The Securities and Exchange Commission has also issued guidance on the rule, stating that it will apply to all pension plans, regardless of size. The goal of the rule is to protect plan participants from conflicted advice.

As a result of the new regulations, many employers are re-evaluating their pension plan options. Some are considering switching to a different type of plan, such as a 401(k) plan.

In a lawsuit filed in May, former employees of Saint James Hospital are seeking $2.7 million in lifetime pension benefits from the Archdiocese of Newark.

They claim their pensions are fully protected by federal law and should be payable for life.

The lawsuit was filed in the Superior Court of Essex County, New Jersey on May 7.

The retirees are alleging that the Archdiocese has wrongly denied them these benefits.

The U.S. Supreme Court's recent decision has left a key issue undecided. The ruling was made regarding pension plans with ties to religious organizations, which may not have to comply with federal pension law.

Hundreds of thousands of people are at risk of not receiving the pensions they earned. The Supreme Court has essentially passed the buck to lower courts to decide the fate of these pension plans.

The decision was made in a case that has left many people wondering about their retirement security. The Court's ruling has left many with more questions than answers.

Lower courts will now have to determine whether these pension plans are exempt from federal law. This means that many people's futures are now in the hands of these lower courts.