Thinking about the Future? So are we
The CEC has implemented this 403b retirement plan to help large and small CEC churches plan for the future, with proper stewardship of the funds. Please read more below and use the form at the bottom to ask any questions.
A 403(b)(9) Retirement Plan
The CEC in North America has a 403(b) retirement plan that any CEC clergy or church parttime or fulltime employee can participate in. The plan is managed by Admin Partners and the funds are all from Vanguard.
This 403b(b) retirement plan designed for ministers and any CEC-NA church employee receiving W-2 taxable income.
Please read all of the below information. If you still have questions contact us with the form at the bottom of this page. If you have a question about selecting the right fund, Click Here.
A 403(b) plan lets you set aside a portion of your salary in an employer-sponsored account to save for retirement. Some employers may also match your contribution.
You don’t pay taxes on your pre-tax contributions to the plan, or on any earnings, the account accumulates until you withdraw the money – which ideally happens when you’re retired. And by then you may be in a lower tax bracket – so there are potential savings every step of the way.
How to Enroll
You are eligible if you are 70 1/2 and younger, you are an employee of a CEC-NA church who receives a W-2 from Church. You can be full time or part-time.
- Step One: Read ALL the information below, first, to include reading Vanguards advice tab on the web site.
Note1: To learn the advantages of a ROTH versus Traditional IRAs for your 403b, read this article about the different IRAs
Note2: To learn the about the basics of Mutual funds, read this article about Mutual Funds
- Step Two: If you have ANY questions contact us with the form at the bottom of this page. (We cannot provide investment advice)
- Step Three: When you are ready, create an account with Vanguard. Please read this if you need more information
a) From the dropdown menu, Select VG00710 – The Charismatic Episcopal Church of North America
b) Fill in all the details Vanguard requires.
c) Wait for 3-5 days, Vanguard will email and ask you to create a login and password.
d) Once you have access to your Vanguard Account, log in at https://investor.vanguard.com/my-account/log-on
e) Click “Enroll Now” You then have a choice of “Automatic Investment” or “My Own Choice”. (This is when you choose your Mutal Fund.)
- “Automatic Investment” is a suite of Funds designed by Vanguard based upon the age you have entered.
- “My Own Investment Choices” and select any Vanguard fund by entering the percentage of your contribution will go to that fund. For example, if your choice one funds you enter 100% if you choose t to distribute your contribution between 4 funds you put 25% each. Please research and understand the risk and any fund you investing.
- Choose one then select your fund (Don’t rush this, seek advice. You can come back to complete this later if need be) Please refer to Vanguards Advice and Retirement section of the Vanguard Web Site.
f) Then you will be asked to review your data
g) Then you will be asked to name a beneficiary and what Percentage, you can name more than one. (Who get this investment if you pass and funds remain)
h) You always have access to this information when you log in and can change these decisions if your situation changes.
i) Complete the screen and Complete the Enrollment
4. Step Four: We now fill out the form to determine the amount you are deducting from your pay.
a) The deduction comes out each time you are paid, so if you are paid monthly, you purchase the mutual fund one time, if you are paid twice monthly, you make two contributions.
b) Your contribution comes out when you are paid, hence you cannot choose a different date to contribute.
c) Download and fill out this form, and either fax it (516-887-4591) or email it ([email protected])
5. Step Five. Once the sign Salary Reduction form is received, you will be sent a form to submit to your whoever does your payroll. Once they have established the periodic investment, the funds will be deposited each pay period with Vanguard. You can monitor this from your Vanguard Web Site portal. Changes in the amount of the investment can be made by updating the Salary Reduction form and submitting it again.
The plan is open to anyone who receives W-2 taxable income from a church, church-related school or association. This can include full- or part-time ministers, office personnel, musicians, church-school teachers or any other staff member.
Potential Tax Benefits
All earnings on contributions and rollovers are tax-deferred. Following are additional tax benefits that may be available to you:
- Ministers may be able to designate retirement benefits as a tax-free minister’s housing allowance within legal limits.
- Employer contributions are not subject to Social Security or income tax at the time of contribution.
- Tax-sheltered participant contributions are not subject to income tax until distributed.
- Tax-sheltered participant contributions by ministers are not subject to Social Security tax.
- Earnings on Roth elective deferral contributions can be withdrawn tax-free if conditions are met.
Numerous Types of Plan Contributions
- Participants can make tax-sheltered, after-tax or Roth elective deferral contributions.
- Employers can make a tax-sheltered contribution on behalf of their employees.
Roth 403b or Traditional 403b
The most common method of funding a 403(b) plan is through an elective deferral. Elective deferrals allow the employer to withhold money from an employee’s paycheck to be placed directly in the employee’s 403(b) account. Another way to fund the account is through a nonelective contribution. In this approach, employers contribute to the account using a matching contribution, discretionary contribution, or mandatory contribution. No salary reduction is made. The final way to put funds into a 403(b) is through after-tax contributions. Here, employees can invest part of their income in the retirement fund when they receive a salary payment for which income tax has been withheld. However, after-tax contributions are not excluded from income and cannot be deducted on a tax return. Employees can choose to combine these three contribution methods in any way they choose.
To determine the maximum contribution amount to the 403(b), users must find the lesser of (1) the limit on annual additions or (2) the limit on elective deferrals. The limit on total contributions can change each year—click here for the most current information. Includible compensation is the total amount of taxable compensation given by the employer to the employee in one year, whether through salary, benefits, or account donations.
|How much can you contribute this year||Catch-up contributions if age 50 or older||Total Employee and Matching together|
Housing Allowances and 403(b) Plans
In most cases, housing should be excluded from compensation for retirement plans due to the special tax treatment of housing allowances. Section 107 of the tax code specifies that housing allowances are not included in gross income and, therefore, not considered includible compensation. For example, if a minister is given $20,000 every year as a tax-free housing allowance, this money would not be included in his gross income for the year and would not be added to includible compensation. If the housing allowance is a significant portion of the minister’s overall compensation, then the amount allowable may be limited to an annual addition or elective deferral.
The limit on elective deferrals is the limit on the amount of money that can be contributed to a 403(b) account through a salary reduction agreement. The IRS may update this figure annually. General limits can be found here. This applies to all elective deferrals contributed, even if they were made through different employers in the same year. If the annual elective deferral is more than the includible compensation amount, then the lesser amount (includible compensation) applies.