FAQ on 403(b) Plan

GENERAL

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1. What type of plan is the Reform Pension Board’s retirement plan?

The Reform Pension Plan is a defined contribution plan organized within the framework of IRS 403(b) regulations. The Reform Pension Plan is recognized by the IRS as a church plan, as the RPB provides benefits to employees of religious institutions.

It is the employer’s and participant’s responsibility to make regular annual contributions, which will enable the participant’s account balance to grow over time. All contributions are made on a pre-tax basis, reducing current taxation. Income tax on contributions and earnings is deferred until the participant takes a direct distribution.

2. Is there a maximum contribution limit on the amount that I can contribute to my RPB 403(b) plan?

Yes. The IRS places limits on the contributions that can be made to 403(b) and other qualified retirement plans in a given year. The contribution limits are determined by whether the contribution being made is an “employer contribution” or an “elective salary deferral.” To see the current IRS maximum contribution limits and further information, click here to go to the “Maximum Pension Plan Contribution Limits” tab on our Programs & Services\Pension Plan\403(b) page.

3. For my other retirement accounts, I am provided with daily updates on my balances. Why does the RPB provide updates on only a monthly basis?

The Reform Pension Plan is a monthly valued pension plan, not an individual investor account managed by a single investment manager. A monthly valued pension plan is a very different investment vehicle.

The Reform Pension Plan funds are invested with numerous investment managers utilizing diverse mandates. We cannot release any performance data until our managers, our custodian and our record keeper data are all reconciled. Finally, the RPB accounting department reviews all of the data before the account information is released. The complexity of reconciling data from all of these sources and ensuring their accuracy takes time to complete. In fact, for a monthly valued program, the RPB is actually providing month-end performance data much more quickly than many other similar plans.

4. What is the RPB’s investment philosophy?

The Reform Pension Board’s investment philosophy is based on two principles: a long-term investment outlook and a diversified portfolio:

The Reform Pension Board’s fundamental viewpoint is that investment decisions should be made based on expected long-term performance. Statistics indicate that changing an investment strategy based on short-term market volatility has historically been an ineffective, and at times counterproductive, approach. The Reform Pension Board remains constant in adhering to a disciplined long-term investment strategy.

The Reform Pension Board maintains a highly diversified investment portfolio to mitigate our exposure to any particular company or investment class. This approach helps diminish the effect of a single market event on the entire portfolio.

5. Can I roll over money from my other tax-deferred accounts, such as IRAs or 401(k) accounts, to my RPB 403(b) account?

Yes, RPB participants can roll over money from other qualified retirement accounts such as traditional IRAs, 401(k) and 403(b) accounts into their RPB 403(b) accounts. Funds rolled into the plan are tracked separately in our systems and on account statements. Please go to the Forms page on our website to download an RPB rollover form or contact the RPB office. We also provide letters of acceptance to facilitate the transactions as needed. Please note that Roth IRAs are not eligible to be rolled over to the RPB 403(b) plan.

6. How can a Plan participant who is going through a divorce divide the account balance between him/herself and the soon-to-be ex-spouse?

In the case of divorce, the RPB requires a Qualified Domestic Relations Order (QDRO) to divide the participant’s RPB account between the participant and his/her ex-spouse. Before a QDRO is processed through the courts, it should be forwarded to the RPB office for review to ensure that it satisfies the RPB’s legal requirements. The RPB provides a Model QDRO as a resource to assist you in this process.

Once a QDRO is filed and approved by the courts and the approved QDRO is received by the RPB office, the appropriate amount will be transferred from the original participant’s account to an account set up for the ex-spouse. The ex-spouse cannot contribute additional funds to the account but can leave the funds invested with the RPB or roll the funds out of the account.

7. What happens to my account balance upon my death?

Participants are required to designate beneficiaries upon joining the Plan. If you are married, your spouse must always be your primary beneficiary unless he/she signs off otherwise to acknowledge a different beneficiary.

In case of death, if your spouse is your primary beneficiary, he or she would take over the account in his/her name and have the same rights to the account as you, including assigning beneficiaries. Your spouse would not be able to contribute to the Plan or claim parsonage.

If you have listed someone other than your spouse as your primary beneficiary, such as your children, they have two options:

  1. They can roll over the pension money to an inherited IRA account.
  2. They can leave the money with the RPB and take distributions (which are taxable income) over no more than a five-year period.

Click here for additional information on beneficiary designation, located in the Programs & Services / Pension Plan / 403(b) section of our website.

8. Does the RPB allow participants to take hardship withdrawals?

The RPB allows participants who qualify to take hardship withdrawals from the Plan in accordance with IRS regulations. If you are considering requesting a hardship withdrawal, please read the “RPB Hardship Withdrawal Requirement Rules” and our “Q&A for Hardship Withdrawals” to learn the criteria necessary to qualify.  We understand that you may be in a difficult situation, and we will be as helpful to you as possible. Contact Ingrid Aponte at iaponte@rpb.org if you need to obtain a hardship withdrawal request package or have questions about hardship withdrawals.

9. Does the RPB allow participants to borrow against their accounts?

No, the Reform Pension Plan does not offer any provisions for loans.

INVESTMENT CHOICE

10. How do I change my RPB investment fund election?

To review your current investment fund election and/or make a new election, log in to RPB InfoExpress from our website homepage at www.rpb.org. Select “Investment Elections” from the options on the left-hand side of the screen to review your current election and to make a new election if you so choose.

The RPB investment choice program remains open all of the time with fund elections becoming effective on the first business day of the following month. For example, if you make an election at any time in the month of July, that election will become effective on August 1st (or the first business day of August if the 1st falls on a weekend or federal holiday.)

If you need assistance logging in to RPB InfoExpress, please contact our record keeper’s (Alliance Benefit Group) call center toll-free at 1-800-495-4015, Monday through Friday, between 8 AM and 7 PM Eastern time.

11. Can I invest in more than one fund?

The RPB diversified, objective-based fund structure is designed to allow you to select a single fund to implement your investment strategy. However, if you want to allocate your account to more than one fund, you may do so. If you are considering investing your account in more than one fund, please keep the following points in mind:

  • The Appreciation and Income Fund is already allocated 50% to the Capital Appreciation Fund and 50% to the Income Focused Fund. Therefore, if you elect to invest your account solely in the Appreciation and Income Fund, your account will be allocated 50% to the Capital Appreciation Fund and 50% to the Income Focused Fund.
  • Participants under age 60 are not permitted to invest more than 80% of their account in the Capital Preservation Fund.

12. Will the RPB automatically rebalance my account?

If you select one fund, there is no need to rebalance your account.  If you select more than one fund, the RPB will automatically rebalance your account on a quarterly basis if the selected funds are more than five percentage points above or below your selected choices.

13. Can the RPB advise me as to which investment fund I should choose?

The RPB cannot decide which investment fund option is best for you, as only you know your personal financial situation. There are many factors to consider in making your fund selection, including taking into account your age, comfort level with risk/volatility and other assets.  The RPB provides educational materials that describe the objective, components and general appropriateness of each fund.  Click here to go to the Programs & Services/Pension Plan/403(b) section of our website and click on the “Reform Pension Plan Portfolio” tab for detailed information about the RPB funds, or contact us at the RPB office to request a print-out of any of our materials by postal mail.

The RPB recommends that you discuss your investment choice with your personal financial advisor.  As an RPB plan participant, you can also contact Ceridian LifeWorks to speak with one of their financial consultants free of charge.  Be sure to tell the representative that you are seeking help with your RPB fund selection, as LifeWorks is also available to assist you with other financial issues such as retirement planning, budgeting, and home financing.  While Ceridian LifeWorks is not a substitute for a personal financial advisor, the Ceridian financial representatives provide educational tools and information to help you with your financial planning needs.

14. How do I contact Ceridian LifeWorks?

If you do not have the phone number and password information for Ceridian LifeWorks, please contact the RPB office.  The RPB provides Ceridian LifeWorks services exclusively to RPB participants and their spouses/partners.

15. Are there any age parameters for investing in the RPB funds?

There is only one age-based investment parameter.  Participants under age 60 are not permitted to invest more than 80% of their account in the Capital Preservation Fund.

RETIREMENT

16. When can I start drawing on my Reform Pension Plan account balance?

Distributions Prior to Age 55
If you are under 55 years of age, you can withdraw your pension funds after a one-year period in which you are no longer working for any eligible employer as defined by the RPB pension plan. You may withdraw your funds either as a direct distribution or as a rollover to another qualified retirement plan. IRS penalties may be incurred for direct distributions under age 59 ½.

Distributions at Age 55 or Older
You must be at least 55 years of age to begin withdrawing pension funds if you no longer work for an RPB-defined eligible employer. You can start receiving distributions from your RPB pension account without employment restrictions after you reach the age of 59 ½.

17. What are my plan distribution options in retirement?

The Reform Pension Plan offers several options for receiving distributions in retirement. Participants may choose one or a combination of the following distribution options:

  • Draw from your account monthly under the Flexible Payment Option.
  • Roll over all or part of your account balance to another qualified retirement account.
  • Take a direct distribution of all or part of your account balance.
  • Purchase an institutionally priced annuity with MetLife through the RPB.

Click here for additional information on distribution options located in the Programs & Services / Pension Plan / 403(b) / Distributions from the Reform Pension Board section of our website.

18. I am planning to retire in less than a year under the Flexible Payment Option. What steps do I need to take with the RPB in order to start receiving monthly distributions from my pension account?

Approximately two months before you plan to retire, you should send a communication in writing to the RPB office using email, fax or postal mail informing us of the date that you are planning to retire and the retirement option that you wish to select. When your communication is received and approved by the RPB office, we will send you the relevant retirement forms and personalized information to facilitate commencement of your upcoming distributions. After you return the completed forms to the RPB office, we will set up your retirement distributions.

19. How often can I change the amount that I draw monthly from my RPB account in retirement through the Flexible Payment Option?

You can change your monthly benefit distribution up to four times during each year of your retirement. You should note that the maximum amount you can withdraw annually is based on 15% of your pension account balance as of the close of the prior plan year. Please contact Ingrid Aponte at the RPB office in writing to request an adjustment to your monthly distribution amount.  We will accept your written request by email, fax or postal mail.  Requests generally need to be received by the RPB office by the middle of the month to be effective as of the 1st of the following month.

PARSONAGE

20. How does the Reform Pension Plan address parsonage declarations?

When retirees draw on their pension accounts in retirement, they are receiving distributions of pre-tax contributions and associated earnings. Under current IRS regulations, clergy can use their parsonage exemption to offset some or all of their taxable distributions depending on their housing expenses. The amount of parsonage they claim against their RPB distributions cannot exceed their income from the RPB. Retired clergy should check with a financial advisor to ensure compliance with the IRS parsonage rules. For specific information on retired ministers’ parsonage benefits from the IRS website, click here: Retired Ministers. For additional information on parsonage, including information from the “Minister’s Guide for Income Tax,” please contact the Central Conference of the American Rabbis (CCAR).

21. How do I submit for my parsonage exemption each year through the RPB?

The RPB sends parsonage exemption forms to retired clergy each fall in advance of the upcoming year. The participant must confirm or lower the amount of parsonage that they declared for the past year and project the amount of parsonage that they wish to set for the upcoming year. The RPB transmits the collected information to the applicable financial institution, who then issues a Form 1099-R to the participant to reclassify the income from taxable to non-taxable.

22. Following my death, can my surviving spouse continue to utilize the tax benefits of parsonage?

The parsonage allowance is only available to the clergy member, not to their surviving spouse.

23. Does money that is rolled over from other tax-deferred accounts such as 403(b)s or IRAs to the RPB qualify for parsonage in retirement?

Rollover contributions and associated earnings will be coming from sources that did not directly contribute the funds to the RPB, and therefore, the RPB does not have the authority to approve parsonage resolutions from distributions coming from rollover funds even if coming from another “church plan.”