The Reform Pension Plan is a Defined Contribution Plan organized within the framework of IRS 403(b) regulations. The Reform Pension Plan is also a church plan, as the RPB provides benefits to employees of religious institutions. The retirement benefits are based upon a participant’s pension account balance at retirement. As the employer, the congregation’s responsibility is “defined” by its contribution, expressed as a percentage of salary (including parsonage) or flat dollar amount, deposited to the participant’s pension account.
We want to stress that 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 retirement distribution.
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Reform Pension Plan Fees
Fees for participating in the Reform Pension Plan vary depending on the participant’s fund election. Fees are expressed as a percentage of a participant’s account balance in basis points. (One basis point is one hundredth of a percent.)
The weighted average investment management fee for each fund:
|Capital Appreciation Fund||68 basis points|
|Appreciation and Income Fund||57 basis points|
|Income Focused Fund||39 basis points|
|Capital Preservation Fund||38 basis points|
Other fees incurred by all participants include:
|RPB Administrative Fee||20 basis points|
|Custody, Record keeping and Investment Consulting fees||6 basis points|
The IRS places limits on the contributions that can be made to a 403(b) plan. These limits are determined by the type of contribution that is being made. There are two types of contributions that can be made to the RPB:
- Employer Contributions are made by an employer to the RPB and are in addition to a participant’s regular salary (and parsonage, if applicable).
- Elective Salary Deferral is a contribution made to the RPB as a pre-tax deduction from a participant’s pay. Elective salary deferrals are facilitated by entering into a Salary Reduction Agreement with the employer. Participants may change their elective salary deferral amount at any time, but the participant and employer must enter into a new Salary Reduction Agreement in each instance. If the participant should leave employment with the congregation before the end of a plan year and a portion of the contribution was prepaid, the congregation may request a refund of the unearned contribution amount.
It is important to note that both employer contributions and elective salary deferrals have to be paid by the employer to the RPB because all contributions to the Plan must be made with pre-tax dollars.
Employer contributions and elective salary deferrals have different maximum contribution limits as follows:
- Employer Contributions – For the 2017 RPB Plan Year, which runs from July 1, 2016 through June 30, 2017, the maximum contribution that an employer can contribute to the RPB 403(b) plan is $53,000 or 100% of the participant’s includable salary if the includable salary as reported to the IRS is less than $53,000. (Includable salary is the participant’s salary excluding parsonage.) If an employer’s contribution exceeds the maximum contribution limit, the overage will be applied to the participant’s RPB Rabbi Trust Account.
- Elective Salary Deferrals – The maximum amount allowable by a participant as an elective salary deferral in the 2017 RPB plan year is $18,000 or 100% of the participant’s includable salary if the includable salary as reported to the IRS is less than $18,000.
- Over 50 Catch-Up Provision – Beginning with the RPB plan year in which participants attain the age of 50, the elective salary deferral portion of a contribution can be increased. Participants who attain the age of 50 or older during the 2017 plan year may increase their elective salary deferral by $6,000 to a maximum of $24,000. In any case, the participant’s elective salary deferral cannot exceed their includable salary.
- Combined Limits – The combined contribution limit to the 2017 plan year is $53,000 unless the over 50 catch-up provision is utilized. If the over 50 catch-up provision is utilized, the combined maximum contribution limit is increased up to $59,000 (the $53,000 limit and a dollar for dollar increase for the over 50 catch-up amount). In any case, a contribution for a participant cannot exceed their includable salary.
There are no minimum pension contribution requirements.
Evaluation of Recommended Contribution Percentages
Participant Investment Choice
The Reform Pension Plan offers its participants four strategically diversified funds from which to choose, each of which is designed with an investment objective in mind:
|Capital Appreciation Fund||Seeks asset growth|
|Appreciation and Income Fund||Seeks asset growth and income (60% Capital Appreciation Fund and 40% Income Focused Fund)|
|Income Focused Fund||Seeks to generate income|
|Capital Preservation Fund||Seeks stability of principal|
Please see the RPB Fund Descriptions, which contain important investment details regarding each of our funds.
To review your current investment fund election or to make a new election, log in to RPB InfoExpress (InfoExpress is unavailable due to a continued system upgrade. We will notify you when the system will be live.) and select “Investment Elections” from the options on the left-hand side of the screen. The RPB investment choice program remains open all of the time with participant elections becoming effective on the first business day of the month following the election. For example, if you make an election during the month of September, it will be effective on October 1st.
If you have questions or need further information on the RPB Investment Choice program, please contact the RPB office.
Beneficiary Designation Forms
RPB participants must designate beneficiaries for their pension account and life insurance benefit when enrolling in the RPB. It is of utmost importance for participants to keep their beneficiary designations up-to-date. This is especially important if a participant has a change in marital status through marriage, divorce, death of a spouse, or whose situation otherwise results in a need to change his or her beneficiaries. Having out-of-date beneficiaries could result in a delay in paying benefits, and more importantly, could result in paying benefits to someone whom you no longer want to receive your pension account balance.
You can designate any person, estate, trust, organization or charity as your beneficiary. If you are married, your spouse is automatically your sole primary beneficiary unless the spouse signs off to acknowledge the beneficiary designation. If you fail to designate a beneficiary for your RPB account and for your life insurance benefit, your spouse will be the beneficiary; if you are not married and you fail to designate a beneficiary, your estate will be the beneficiary.
You can allocate portions of your RPB account and life insurance benefit to several beneficiaries by allocating a percentage of the account to each named beneficiary. You can also name a secondary beneficiary who would receive payments if the primary beneficiary was no longer alive or if the primary beneficiary declined receiving the funds.
Click here to access the Pension Account Beneficiary Designation Form.
Here is how the beneficiary designations work for RPB pension plan balances:
- If your spouse is your beneficiary:
- He or she would take over your account upon your death. The spouse would become the RPB participant under his or her social security number. There are no income tax issues until the spousal beneficiary takes a direct distribution of the pension account balance.
- The spousal beneficiary would have all of the same rights as the original participant. The spousal beneficiary can utilize any of the RPB distribution options.
- Parsonage exemptions that were declared by the original plan participant can’t be continued.
- The spousal beneficiary would be required to take IRS Required Minimum Distributions (RMD) based on his or her age. Distributions in excess of the RMD can be taken in accordance with RPB distribution rules. Distributions must commence when the spousal beneficiary attains the age of 70 ½ if he or she is retired.
- If your child or children are your beneficiary:
- Your child or children would become RPB participants. If your child or children are minors, (a person not of legal age) you must have a guardian or an administrator appointed before an account transfer or payment can be made.
- Benefits must be paid out over a period not exceeding five-years. The benefits would be taxable income to the children.
- Children can roll over their RPB accounts to an “inherited IRA,” which would defer income taxes on their RPB accounts.
- If a trust is your beneficiary:
- You must send a copy of the applicable sections of the trust that apply to the RPB to the RPB office, including the signature page.
- Upon your death, a direct distribution would be paid to the trust.
- The payment to the trust would be taxable income, and the RPB will withhold 20% of the distribution as a Federal income tax withholding.
- If an organization or charity is your beneficiary:
- The RPB will pay out a distribution to an organization or trust based on your beneficiary form.
- The RPB will withhold the appropriate income taxes from the distribution.
A Note About the Life Insurance Beneficiary Form and Addendum:
Regardless of your current eligibility status for life insurance coverage, you must complete the life insurance beneficiary form and corresponding addendum when enrolling in the RPB. Your beneficiary forms will remain on file in the event that you increase your pension contribution to a minimum of 10 percent.
When you have completed your beneficiary designation forms, please mail your original forms to the RPB office. We cannot accept a copy, electronic scan, or fax of the beneficiary designation forms. Your original beneficiary designation form will be countersigned by the RPB Plan Administrator, and a copy of the fully executed forms will be returned to you for your records.
Please contact the RPB office if you have questions about completing your RPB beneficiary designation forms.
Important Update Regarding Same-Sex Marriages
In June 2015, the Supreme Court ruled that same-sex marriage is legal nationwide. IRS tax rules state that a same-sex marriage validly entered into in any U.S. state or a foreign country will be treated as a marriage under federal tax laws. It should be noted that civil unions or domestic partnerships that are not identified as “marriages” do not count under the IRS rules.
Please note the following:
- Couples who have entered into same-sex marriages will now indicate that they are married on the RPB beneficiary forms. If you are currently legally married, please complete new beneficiary forms to update your status if needed. Beneficiary forms are available on our website, www.rpb.org, in the “Forms” section (http://rpb.org/forms/).
- A same-sex married beneficiary will receive the same tax treatment as a heterosexual married beneficiary.
- A same-sex spouse will be required to consent to distributions from the Plan the same as is required of a heterosexual spouse.
- Qualified Domestic Relation Orders (“QDROs”) must be completed for same-sex divorces. As with heterosexual married couples, a QDRO is the only legal document that will be accepted to divide an RPB account in the event of a divorce.
Reform Pension Plan Portfolio
The RPB’s Investment Committee, along with Summit Strategies Group, an independent investment consulting firm, performs an ongoing evaluation of the structure of the Reform Pension Plan and monitors the performance of all RPB investment managers. To learn more about our investment portfolio, please click on the links below:
Jewish Values Investing
The RPB Jewish Values Investing (JVI) policy demonstrates our continued commitment to integrate consideration of Jewish values into our investment process while maintaining our paramount focus on our fiduciary obligation as a pension fund. The JVI policy was approved in 2014 to:
- Consider Jewish values during investment analysis, manager selection and the ongoing investment management evaluation process.
- Include environmental, social, and corporate governance (ESG) investment factors, as well as strong support of Israel.
The Jewish values of tikkun olam (repair of the world) and tzedek (justice) help to guide our investment process. Fundamental Reform Jewish beliefs, as articulated by the Central Conference of American Rabbis (CCAR) and the Union for Reform Judaism (URJ) resolutions from 1889 to the present, are the foundation for the RPB’s Jewish Values Investing policy. Please click on the following link to view the full RPB JVI policy statement, our FAQ on our JVI policy, the history of the development of our JVI policy, and the RPB’s review of CCAR and URJ resolutions: Jewish Values Investing
Rollovers to the RPB: Forms and Information
The RPB accepts rollover funds from other qualified 403(b) plans, 401(k) plans, IRAs and other tax-deferred plans. To verify that the funds are considered qualified retirement funds, participants must complete an RPB Rollover Transfer Form. Rollovers can be made via wire transfers or by checks. Rollovers will be shown separately from other RPB assets on account statements and will be subject to the same RPB rules and investment allocation choices as other RPB funds. It is important to note that money that is rolled over from sources other than URJ-affiliated congregations is not eligible for parsonage exclusion in retirement. The RPB also can’t accept rollovers from Roth IRAs.
The RPB Pension Plan offers several options for receiving distributions at retirement. Participants may establish a monthly distribution from their account under the Flexible Payment Option, roll over all or part of their account balance to another qualified retirement account, take a direct distribution of all or part of their account balance or purchase an institutionally priced annuity with MetLife through the RPB. Participants may choose one or a combination of these distribution options. Please see further information on our retirement options in the following descriptions and chart:
- Flexible Payment Option: The Flexible Payment Option is currently the most popular distribution option with benefits including: continued exposure to the financial markets, which could provide growth potential to a pension account, investing managed by the RPB and an account balance transfer to beneficiaries in case of death. Along with the benefits, there is a certain amount of risk with this option including: participants outliving the money in their pension accounts depending on the level of actual earnings and level of distributions, and exposure to the financial markets could result in lower balances when the markets have negative results.
- Lump Sum: The partial lump sum rollovers or direct distribution options can be taken no more than once per year. Please read our Special Tax Notice if you are considering a lump sum distribution.
- Rollovers: A lump sum rollover to another financial institution carries both a potential benefit and a potential risk, since account and investment management is decided by the participant within the parameters of the entity receiving the rollover. It is important for clergy to note that if they roll money out of the Reform Pension Plan, they risk a likely loss of their parsonage exclusion exemption benefit.
- Direct: A direct distribution carries both a potential benefit and a potential risk, since the option gives full responsibility for investment and management of the funds to the participant. The entire distribution is subject to taxation. It is important for clergy to note that if they roll money out of the Reform Pension Plan, they risk a likely loss of their parsonage exclusion exemption benefit.
- Annuity: You can purchase an institutionally priced annuity with MetLife through the RPB. The MetLife Guaranteed Income Program provides you (and your spouse/partner, if elected) with stable, predictable income payments that continue for life.* Payment options can be elected to keep up with inflation and ensure a cash refund to your beneficiary for any purchase payments not already received as income.** Clergy should note that annuity income is eligible for parsonage exclusion.
* This guarantee is based on the claims-paying ability and financial strength of Metlife.
** The amount of the distribution you receive will vary based upon the type of annuity that you purchase.
Please contact the RPB office to request additional information and retirement forms for the above distribution options. We will send the information and forms to you via email or postal mail. You can also schedule an in-person meeting to discuss your individual retirement situation.
|Type of Distribution||Benefits||Risks|
|Flexible Payment Option||
|Lump Sum Rollovers to another Tax-Deferred Program or Personal IRA||
|Lump Sum Distributions||
|Annuities Purchased through the RPB||
* This guarantee is based on the claims-paying ability and financial strength of Metlife.
** The amount of the distribution you receive will vary based upon the type of annuity that you purchase.
Special Tax Notice
Lump Sum: The partial lump sum rollovers or direct distribution options can be taken no more than once per year. Please read our Special Tax Notice if you are considering a lump sum distribution.
Distributions Prior To Age 55
If you are under age 55, you may withdraw all or a portion of your pension funds after a one-year waiting period in which you no longer work for an eligible employer as defined by the RPB Pension Plan Document. These withdrawals can be made as a direct distribution or as a rollover to another qualified retirement plan. IRS penalties may be incurred for direct distributions.
Distributions between Age 55 and 59 1/2
If you are between the ages of 55 and 59 ½, you may withdraw all or a portion of your pension funds with no waiting period after you no longer work for an RPB-defined eligible employer. These withdrawals can be made as a direct distribution or as a rollover to another qualified retirement plan. IRS penalties may be incurred for direct distributions.
DISTRIBUTIONS AT AGE 59 ½ OR OLDER
You may withdraw all or a portion of your pension funds with no waiting period and no employment restrictions once you reach the age of 59 ½. See above for the different types of distributions available from the RPB.
RPB facilitates parsonage declarations in retirement for clergy. Distributions from the Reform Pension Plan are considered as taxable income. When retirees draw on their pension accounts in retirement, they are receiving distributions of pre-tax contributions and associated earnings. Clergy can use their parsonage exemption to offset some or all of the taxable income on their distributions depending on their housing expenses. 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.
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. It is important to note that retired clergy are eligible to use a parsonage exemption and do not have to be associated with a congregation in retirement or need to have a title such as Rabbi Emeritus to utilize their parsonage exemption. For additional information on parsonage, including information from the “Minister’s Guide for Income Tax,” please contact the Central Conference of American Rabbis (CCAR) at firstname.lastname@example.org.
Qualified Domestic Relations Orders (QDROs)
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 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.
Once a QDRO is filed and approved by the courts, the RPB will transfer the appropriate amount 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 roll the money out of the account or leave it invested with the RPB.
Required Minimum Distributions (RMDs)
Please contact the RPB office if you have questions concerning your RMD.