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Reformed Church in America Mid-Atlantic Regional Meeting May, 2013 Briefing on RCA Retirement Plans - Ken Bradsell & Claude Bussieres.

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Presentation on theme: "Reformed Church in America Mid-Atlantic Regional Meeting May, 2013 Briefing on RCA Retirement Plans - Ken Bradsell & Claude Bussieres."— Presentation transcript:

1 Reformed Church in America Mid-Atlantic Regional Meeting May, 2013 Briefing on RCA Retirement Plans - Ken Bradsell & Claude Bussieres

2 RCA 403(b) Retirement Program - Overview  Eligible Participants  Mandatory for RCA Ministers of Word and Sacrament  Prescribed in Formulary 5 of the BCO  Optional for lay employees of adopting employers (e.g., GSC)  Church Contributions Requirement  11% of Eligible Pay, minimum of the EBPH ($6,325 in 2013)  Eligible Pay  Base Salary + Housing allowance  If parsonage is provided, 140% of Base Salary  Contributions accumulated with investment return in individual accounts at Fidelity 2

3 RCA 403(b) Retirement Program - Overview 3  Accumulated Assets as of May 15, 2013  403(b) plan: $104,694,071  Retirement plan: $268,320,353  From data used for Fidelity GAP Statements, approximately:  1,381 non-retired participants  Average church/employer contribution in 2012 of $5,089  2012 EBPH: $6,159  Average minister/employee contribution in 2012 of $1,640

4 2011 Audit 4  Auditors of the plan, CapinCrouse, provided a qualified audit  Issues  Lack of verification if the correct amount of contributions is paid into the plan  Lack of monitoring that contributions are remitted to the plan  Explanations  Salary information not available  Decentralized process of remittance of contributions to Fidelity – directly from the Church to Fidelity

5 2012 Audit - Correction Project 5  Project initiated to verify and correct where applicable issues identified in 2011 audit  Project scoped with assistance of auditors (CapinCrouse) and legal counsel (Conner Winters)  Request for information sent to all Church treasurers in May, 2012, reminder in July and again in the fall  Information requested for CY 2009-2011  List of eligible pastors, salary, housing allowance, contributions paid

6 Correction Project - Findings 6  Request for information sent to approx. 867 churches  Received 367 responses (42%)  258 usable responses (29%)  Data carefully reviewed to determine any underpayment  Where no data was provided a church/employer contributions underpayment was estimated  Total estimated reserve for contributions underpayment of $2.3M as of Sept. 30, 2012  Includes assumed investment earnings  Calculated exactly where data received, estimated for remainders based on data received

7 Legal Considerations 7  The RCA 403(b) Retirement Plan is a Church plan under ERISA / IRS Regulations  No legal requirement to review pre-2009 years  Legally the obligation is with each individual church and the classis, NOT with the Board of Benefits Services

8 Contributions Underpayment - Example 8  Real Case  Contribution shortfall of more than 10% of contributions owed  In addition, assumed investment earnings must be added YearSalaryHousing Allowance Eligible Pay Contributions Owed Contributions Paid Shortfall 2009$43,680$18,200$61,880$6,806$6,000$806 2010$44,554$18,200$62,754$6,903$6,000$903 2011$46,554$18,200$64,754$7,123$6,000$1,123 $20,832$18,000$2,832

9 Review of Data Received 9  Salary, housing allowance, voluntary contributions, church contributions  “Special” situations  Parsonage provided – impact on calculation of the employer contributions  EBPH  Commissioned Pastor  Pastor under contract  Part Time  Employer Contributions  Exact, over, under contributions

10 Next Steps 10  The RCA ( BOBS, individual churches, classis) are required to collect underpaid contributions  Next steps (more detailed timeline in Appendix 2):  Data will be requested for churches that have not responded  Internal (Finance & BOBS) process will be implemented to bill and collect the contributions and post to Fidelity accounts of impacted pastors  Invoice churches which owe contributions to the plan  Revise the F/S total reserve for underpayment of contributions

11 Why is this Important ? 11  To keep the plan compliant with the IRS regulations  A qualified audit impacts the perception of the RCA  Because we care for our pastors – Formulary 5  Financial wellness at retirement is important  Recently distributed Fidelity retirement GAP statements may have raised questions about financial preparedness for retirement and possibly concerns  Because the RCA retirement assistance fund is limited  People are living longer, thus longer needs for retirement income  Resolution of this problem is an important issue for the RCA, our churches and classis and our pastors

12 Going Forward 12  Collection of relevant data to verify the remittance to the retirement plan will an annual process, possibly part of the CRF  Information will be kept with highest level of confidentiality  BOBS and Finance have started to work with Fidelity to monitor more closely monthly remittance to 403(b) Retirement Program  Early detection of potential issues  Assistance to church treasurers to make the process as smooth as possible  Information sessions via webinar, posting of information on RCA-BOBS web site, etc…  What do you need?

13 Next Audit – As of September 30, 2013 13  Unqualified Audit in 2012  Auditor’s comments and Management Response  By September 30, 2013 Audit  Start collection of unpaid employer contributions owed to the plan  Assessment of collectability of reserve  Adjust reserve amount for:  Amounts collected  Based on new information received  Collectability

14 Other Business - Past 14  Fidelity GAP Statements  Distributed last November  Quarterly Fees Levied on Participant Accounts  Effective in 2013, 36 bp annually (9 bp quarterly), down 10% from 2012  Timing changed from end of each quarter to beginning of last month of each quarter  On employer accumulated contributions only  Assistance Program  Managed by Julie VanderVeen Van Til  Partly paid by quarterly fees levied on participant accounts

15 Other Business - Future 15  Investment Committee of the RCA Retirement and 403(b) plans  Continuous monitoring of fund performances and costs  Fidelity Accounts  Change to Fidelity Funds Line up effective June 25, 2013  One fund removed  Eaton Vance Large Cap Value Fund  Two funds added  Fidelity® Strategic Real Return Fund  Invesco Diversified Dividend Fund R5 Class

16 Fidelity NetBenefits - Demo 16

17 Appendix 2 – Next Steps Timeline 17 Communication, Communication…  Letter to all treasurers and Classis executives to communicate next steps and new processes being implemented to monitor compliance of the RCA 403(b) Plan – by May 31st  E-mail to all treasurers (with copy to classis executives) requesting information for CY 2012 - by May 31 st  General Synod – Sessions with Classis Clerks  Letter to treasurers of churches that provided all the necessary information for CY 2009-2011 - by July 31 st  Confirmation the right amount was paid into the Minister’s 403(b) account for 2009-2011  Confirmation of underpayment to the 403(b) account and instructions on how to remediate  Letter all other treasurers - by August 31 st  Re-request of the information for CY 2009-2011, or  Need clarification on data already provided  Classis executives will be kept informed  Board of Benefits need your assistance

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