denominational retirement plan presented: colorado springs:august 20, 2012 atlanta:august 23, 2012...
TRANSCRIPT
403(b)(9) Retirement Plan
Denominational Retirement Plan
Presented: Colorado Springs: August 20, 2012
Atlanta: August 23, 2012
© 2012 Envoy Financial, Inc. All rights reserved.Envoy Financial, 8415 Explorer Drive, Suite 115, Colorado Springs, CO 80920
Securities offered through Envoy Securities, LLC, Broker Dealer, Member FINRA/SIPC. Advisory Services offered through Envoy Advisory, Inc., Registered Investment Advisor.
First Use: August 20, 2012
Bruce H. BruinsmaEnvoy FinancialCEO & Co-FounderDirect: 719.268.2711, ext. 203Cell: 626.399.2247Email:[email protected]
Speaker Today
What is retirement? ◦ That depends on your perspective.◦ Retirement years are also “ministry” years.
At Envoy, we see retirement as “not only a reward for past service, but a stepping-stone to future ministry”
Future-Funded Ministry: ◦ Managing God’s resources God’s way so
His purposes can be carried out in and through our lives, to the very end.
A Future-Funded Ministry Plan
“It is vanity to wish to live long... and then not to live it impacting
others. A life well spent”
A Key Thought From Long Ago: Thomas à Kempis
A National Plan: Reduces costs, simplifies administration
A 403(b)(9) Church Plan: Maintains key benefits
10% Required church contribution for all Ministers and Designated Executives
All churches, Presbyteries, and National office a part of the plan: An Opt Out Option for Churches
A Plan to Benefit All: Key Highlights
National Office:◦Legal ◦Investment menu◦Administrative
oversight
Local Church:◦Who Participates◦How much is
contributed (10% for ministers)
◦When the church contributions start
◦[Universal eligibility on a voluntary basis]
Key Decisions
A plan for those with ministerial status and named executives is required:◦ 10% minimum contribution◦ Additional options such as an additional matching
component are possible
Staff may participate on a voluntary basis immediately beginning with employment
A plan for staff composed of either a basic contribution, matching contribution, or both is available and up to each church to decide
403(b)(9) Church Plan
Housing Allowance: Distributions taken by those with ministerial status can be tax-protected
A Roth Provision: After-tax contribution and tax-free growth
Loan Provision Default Investment: Where the money goes if
the participant does not select one Automatic Enrollment: Starts the contribution
even if the eligible participant has not enrolled
Key Features of the Plan
Roth Contribution Options
*Subject to Qualification Rules
Traditional 403(b) Roth 403(b)
Pre-Tax Contributions
Tax-Deferred Savings
Taxable Withdrawals
Taxed Contributions
Tax-Free Earnings*
Tax-Free Withdrawals*
The Retirement Plan Oversight committee:
Minimum of 5 members:◦ Minister with investment
knowledge◦ Minister with no
retirement plan expertise◦ Investment specialist◦ Communication specialist◦ COO of the ECO◦ Additional member as
needed
Support for the plan will come from:
Envoy TPA and Recordkeeping
Envoy Advisory Envoy Financial
◦ Legal and Compliance ◦ Recordkeeping and
reporting◦ Investment Counsel◦ Education and
Information
Legal and Operational Framework
Delivery services, education and information will come to you throughthe Envoy Web Portal
Our SmartPlan Interactive Guide helps Participants determine their risk profile, select investments, complete account reviews, and more!
The Envoy Web Portal
Provides clear, concise, easy to understand information:◦ Plan information◦ Keys to understanding◦ Enrollment : Risk Profile, $ goals, Investment
allocation suggestion◦ Periodic reviews◦ All administrative activities: Loans,
Distributions, Contributions, and Investment changes
The Envoy Web Portal
Connect to the Envoy Web Portal
Here are the KEY Questions?
How does this impact me?Will I have enough?
Ministers:◦ Your PCUSA defined benefit plan will
remain and be distributed according to its formula and age availability
◦ All future contributions will go into the ECO 403(b)(9) Church plan
◦ All current 403(b)(9) account values may be transferred to the new ECO Plan
◦ Transfers from other plans and eligible IRA’s to the ECO Plan are allowed
How Will This Impact Me?
Non-Ministerial Staff:◦ All current PCUSA 403(b)(9) account values are eligible for transfer
to the ECO 403(b)(9) Plan
◦ All future voluntary, and if available, church basic or matching contributions will be made to the ECO 403(b)(9) Plan
◦ Transfers from other plans and eligible IRA’s to the ECO plan are allowed
How Will This Impact Me?
Will I Have Enough?Pension Calculation PCUSA Defined Benefit Examples:
Effective Salary $40,000.00
$56,000.00
$60,000.00
Median salary 2010 $52,900.00 $52,900.00 $52,900.00
Salary used for calculation
$52,200.00 $56,000.00 $60,000.00
Annual pension credit accrual
$661.00 $700.00 $750.00
Pension credits for a 30-year career
$19,830.00 $21,000.00 $22,500.00
Monthly pension for life $1,652.50 $1,750.00 $1,875.00
Survivor’s monthly pension for life
$826.25 $875.00 $937.50
Retirement CalculatorsRetirement: Age 67
Retirement CalculatorsRetirement: Age 67
Key Assumptions:◦ Age◦ Current income◦ Life expectancy◦ Salary growth (1.5%)◦ Contribution to retirement
($ amount) (10%)◦ Rate of return (6%)◦ Distribution factor (7.3%)
Retirement Planning: Ministers, Estimate
Current Defined Benefit Plan+
Current Defined Contribution Plan
+ECO 403(b)(9) Plan
=Estimated Income
Estimated Retirement Formula
Current PCUSA Defined Benefit$ 2,800 Estimated Defined Contribution$ 1,500 Estimated ECO 403(b)(9) $ 2,012
Total Monthly Inc. Estimate $ 6,312 Annual Estimated Income $ 75,744
◦ Assumes: Age 50, $70,000, retires at 67
Retirement Income Example
Current PCUSA Defined Benefit$ 3,500 Estimated Defined Contribution$ 1,500 Estimated ECO 403(b)(9) $ 564
Total Monthly Inc. Estimate $ 5,064 Annual Estimated Income $ 60,768
◦ Assumes: Age 60, $100,000, retires at 67
Retirement Income Example
ALERT!
One of the Goals for the ECO plan is total transparency regarding costs and fees. New regulations will require that all fees and costs be disclosed by all vendors later in 2012.
In the industry, costs of 403(b) and 401(k) plans have often not been disclosed. The disclosure will be paired with the services being provided. There will not be just a “total” number. If you are involved in other retirement plans, these disclosures will be coming later this year... don’t be surprised.
So Are There Any Costs?
Initial:◦ $5 Recordkeeping setup per participant◦ $5 Advisory setup per participant
Ongoing:◦ $75 per year administrative
403(b)(9) Costs:To the Sponsoring Church (Member Sponsor):
Participant: ◦ Advisory: $5 annually, collected monthly◦ Administrative: $35 annually, collected monthly◦ Recordkeeping: .0025 annually, collected monthly
Advisory:◦$1,000,000 .58% annual rate .0542% monthly◦$2,000,000 .48% annual rate .0400% monthly◦$4,000,000 .39% annual rate .0325% monthly
403(b)(9) Costs:To Participants:
Church decides whether to opt out or not?◦ If “opt out”, then Church Board to sign required
paperwork If in, then decide the answers to:
◦ Who, When, and How much Complete the Member Sponsor paperwork:
◦ This will be available “online” so look for information
◦ Select a Member Sponsor Plan Administrator for your church
◦ Follow the instructions as provided
So, What’s Next?
Website:◦ Envoyfinancial.com◦ ECO Retirement plan website (available soon)
Question and Answer:◦ Available online or email
Envoy Financial ECO representative (contact information available soon)
National Office ECO representative (contact information available soon)
How Will I Find More Information and Answers to My Questions?
A National Plan: Nat’l Office, Presbyteries, Churches
A 403(b)(9) Church Plan, defined contribution
10% to ministers and designated executives
A church may opt out, but have adequate substitute
Legal, Investments and Administration: National Office
Plan design and qualifications, local church
Support: Envoy Advisory, Envoy TPA and Recordkeeping, Envoy Financial
Review and Highlights
Services provided by:
Envoy TPA and Recordkeeping, Inc. Third Party Administration Envoy TPA and Recordkeeping, Inc. Recordkeeping Services Envoy Advisory, Inc. Registered Investment Advisor Envoy Securities, LLC Broker/Dealer Member FINRA/SIPC Envoy Financial, Inc. Education, Sales and Marketing
Bruce H. BruinsmaDirect: 719.268.2711, ext. 203Cell: 626.399.2247Email:[email protected]: www.EnvoyFinancial.com