The CPF Board has determined there will not be a cost-of-living increase (COLA) for beneficiaries of The Episcopal Church Lay Employees’ Retirement Plan (Lay DB Plan) in 2018.
Letter mailed to all Lay DB beneficiaries December 12, 2017
We are writing on behalf of The Church Pension Fund Board of Trustees (CPF Board) with respect to its 2018 cost-of-living adjustment (COLA) decision. Unfortunately, as in recent years, there will be no COLA for participants and beneficiaries of The Episcopal Church Lay Employees’ Retirement Plan (Lay DB Plan) for 2018.
As in prior years, the CPF Board referred to its current COLA policy to only consider granting a COLA when a defined benefit pension plan is fully funded. As of September 30, 2017, the Lay DB Plan was not fully funded. We hope you understand that the decision not to grant a COLA for 2018 protects the long-term viability of the Lay DB Plan and the continuity of pension payments participants and beneficiaries receive.
We know this decision not to grant a COLA is disappointing, but we hope this letter offers a clearer understanding of the thought process behind the CPF Board’s decision. As always, if you have any questions or comments, please do not hesitate to call us at (866) 802-6333, Monday – Friday, 8:30AM – 8:00PM ET, excluding holidays.
We wish you a blessed Advent season.
The Church Pension Fund Board of Trustees
CEO and President
The Church Pension Fund
What We Consider When Determining COLA
Although not required by plan rules, the CPF Board has granted a COLA to beneficiaries of our defined benefit plans in years when the financial condition of the plans allowed for it. While we make our own decisions as to these increases, we have historically looked to the U.S. Bureau of Labor Statistics’ Consumer Price Index (CPI) as a benchmark to guide our thinking – a standard that many organizations, such as the Social Security Administration, look to when making decisions about cost of living increases.
The board also considers the funding status of each plan before making its annual COLA decision to ensure that the COLA decision is made in a manner that protects the long term stability of the plans.
Defined Benefit Plan
The current assessment is 9% of the employee's compensation.
Defined Contribution Plan
Employers contribute a base contribution of at least 5% of employee compensation and match employee contributions up to 4%. The employer's matching contribution, when added to the base contribution, must equal at least 9%.
- The Episcopal Church Lay Employees' Defined Contribution Retirement Plan (the "Defined Contribution Plan"), a 401(a) and 403(b) plan, whose records are kept by Fidelity Investments
- The Episcopal Church Lay Employees' Defined Benefit Retirement Plan (the "Defined Benefit Plan")
- The Episcopal Church Retirement Savings Plan (the "RSVP Plan"), a 403(b) plan, providing individuals with a vehicle to save for retirement in a tax-effective way
(View details in Active Lay Employees section of this website)
Both Resolution A138 and A177 contain the following phrase with regard to the applicability of the Resolutions: “...any domestic Diocese, Parish, Mission or other ecclesiastical organization or body subject to the authority of the Church.” While this phrase has existed in the Constitution and Canons since 1914, the recent enactment of Resolutions A138 and A177 has resulted in many questions regarding the meaning of the phrase.
The final determination as to whether or not a specific organization is subject to the authority of the Church will be made by each diocese. Since each diocese will be asked to identify their organizations during the rollout of the registration system, the following are questions to consider when determining if an organization is "under the authority of the Church."
- Is the organization subject to the Constitution or Canons of the General Convention?
- Is the organization subject to the Constitution or Canons of your diocese?
- Does your annual Convention/Council/Synod elect or approve the appointment of a majority of the governing body of the organization?
- Does the Bishop appoint or approve the election of a majority of the governing body of the organization?
- Was the organization created by the diocese?
- Is the organization separately incorporated from the diocese?
- Does the organization use the diocese or parish’s tax exemption (501(c)(3)) or does it have its own exemption?
- Does the organization use the diocese or parish’s tax or employer ID number or does it have its own?
- Do the organization’s founding documents (e.g., articles of incorporation) link its mission, operations, or assets to the diocese or parish?
- Is the organization required to have the approval of the Bishop or Chancellor or some person or body in the diocese to amend its Articles or Bylaws or other governing documents?
- Is the Bishop the ex officio Chair or President of the governing body?
- Does the organization have the word “Episcopal” in its name?
- Has the organization been treated as part of the diocese?
- Is the organization listed in the diocesan directory or journal?
- Is there a close, day-to-day coordination of the religious, educational, or other charitable activities of the diocese or parish and the organization?
- Does the organization manage its own assets and have its own bank accounts and payroll or are any of those managed by the diocese or parish?
- Is the organization required to obtain approval of the diocese or parish to leverage or dispose of its property?
- Does the diocese or parish have the right to set objective standards for the organization’s operations and/or audit the organization’s records to determine compliance with such objective standards?
- Does the diocese or parish have the right to sanction the organization by liquidating the organization, terminating the organization’s founding documents, or otherwise?
- Does the diocese or parish have the right to the organization’s assets upon the organization’s liquidation?
- Is the organization required to submit an annual report and/or audited financial statements to the diocese or parish?
Please note that the above is provided for informational purposes only and should not be viewed as legal or other advice. We recommend that you consult with your legal advisor before determining which organizations within your diocese are subject to the authority of the Church.
What is the timeline for schools serving children of any age to achieve the full employer base and matching contributions?
If a diocese has determined that a school serving children of any age is subject to the authority of the Church, the school has until January 1, 2018 to achieve the full employer base and matching contributions for defined contribution plans. Resolution C042 provides a specific year-by-year phase-in schedule. If a school's contributions to employee pensions are already above the minimum required contribution or match percentage as indicated in the phase-in schedule, the school cannot lower its contribution or match. However, the school may hold off making further contribution increases until required to do so under the phase-in schedule.
About the Lay Employee Pension System
The Lay Employee Pension System was established by the 76th General Convention (2009). It requires that employees of any domestic diocese, parish, mission or other ecclesiastical organization or body subject to the authority of the Church scheduled for 1,000 hours or more of compensated work annually be provided with a lay pension plan benefit.
Employers were required to comply by January 1, 2013.
The Church Pension Fund is the administrator of the Lay Employee Pension System.
Why did General Convention elect to place the responsibility for administering the Lay Employee Pension System with only one organization?
Having one Church-wide pension administrator helps ensure compliance with the provisions of Resolution A138. This also makes it easier for an employee to continue to participate in the Lay Employee Pension System if the employee moves from one Church employer to another.
For the Defined Contribution Plan:
- the employer contributes not less than 5% of the employee’s compensation as defined by the plan.
- the employer also matches on a dollar-for-dollar basis not less than 4% of the employee’s compensation.
For the Defined Benefit Plan:
- the employer assessment will not be less than 9% of the employee’s assessable compensation.
Can an employer who is participating in the Defined Contribution Plan elect a base contribution amount that is greater than 5%?
Yes. An employer can elect any base contribution amount that exceeds 5% as long as the total of the base and matching contributions equals or exceeds 9%. For example, the employer can elect a base contribution of 7% and a matching contribution of 2%. An employer can also elect a base contribution of 9% or 10% or more with no matching contribution.
Will an employee’s service prior to being provided a lay employee pension benefit be counted for vesting purposes?
Yes. All service earned during employment with any Episcopal Church employer will be counted for vesting purposes.
Will an employer be allowed to continue minimum age and service requirements for participation in the Lay Employee Pension System?
No. Effective January 1, 2013, there will no longer be any age or length of service requirements.
Sponsored Lay Pension Plans
The Church Pension Fund sponsors the following plans:
- The Episcopal Church Lay Employees’ Defined Contribution Retirement Plan (the Defined Contribution Plan)
- This plan requires employers to contribute a base percentage of an employee’s compensation plus a dollar-for-dollar matching contribution to an account that is held in the employee’s name.
- Employees must contribute to their accounts to trigger the employer matching contribution.
- The Episcopal Church Lay Employees’ Retirement Plan1 (the defined benefit plan)
- This plan requires the employer to pay an assessment to the Church Pension Fund that is based on a percentage of the employee’s compensation.
- No employee contributions can be made to this plan.
- The employee’s pension benefit is determined at retirement based on a formula that takes into account the employee’s credited service in the plan, the employee’s highest average compensation and a multiplier which is currently 1.5%
- The Episcopal Church Retirement Savings Plan (RSVP)
- This plan allows employees to contribute to a tax deferred retirement account that is held in the employee’s name.
- No employer contributions are required although optional employer contributions are permitted.
- Participants in a defined benefit plan often use this plan as a means for personally saving for retirement.
1The Lay Defined Benefit Plan is a qualified plan under Section 401(a) of the Internal Revenue Code, but as a church plan, it is not subject to ERISA. An independent audit of the plan's financial condition is disclosed in the Church Pension Group Annual Report. The Church Pension Fund, as sponsor of this plan, continues to monitor the funding status closely, because like many defined benefit plans, currently it is not fully funded.
Fidelity Investments is the current record keeper for the Defined Contribution Plan and RSVP. The Church Pension Fund is the record keeper for the Defined Benefit Plan.
Defined Contribution Plan: Employer contributions are always 100% vested in the plan.
Defined Benefit Plan: Active employees are fully vested after earning five years of service or at age 55, whichever comes first.
An employee can contribute up to the lesser of 100% of compensation or the maximum limits established by the Internal Revenue Code as adjusted annually by the IRS. The IRS has set the employee pretax contribution limit at $18,000 for 2017. Employees age 50 and over can make an additional pretax catch-up contribution of $6,000 in 2017. The limitation on total contributions (both employer and employee) is the lesser of $54,000 (or $60,000 including catch-up contributions) or 100% of your compensation in 2017 minus any required withholdings.
Investment options include a variety of choices ranging from a money market mutual fund to growth-focused stock mutual funds. A stable value investment option is also available. Also included are the Fidelity Freedom Funds®, which are the default investment options for the Defined Contribution Plan. The employee bears the investment risk. The employee should read the available educational materials and possibly seek professional investment advice prior to selecting from the various investment options.
The investment options in the defined contribution plan have fees that range from zero to 1.31% depending on the investment option selected. The Church Pension Fund charges an administrative fee of 0.075% per quarter on the participant’s mutual fund account balance. There are no fees charged to the employer. There is no management fee on the Stable Value Option.
Where can an employer obtain additional information regarding the lay employee pension plans that are sponsored by the Church Pension Fund?
Additional information can be obtained by:
- Calling the Church Pension Fund at (866) 802-6333, Monday – Friday, 8:30AM – 8:00PM ET, excluding holidays, or
- Emailing the Church Pension Group at email@example.com .
Any domestic diocese, parish, mission or other ecclesiastical organization or body subject to the authority of the Church with lay employees scheduled for 1,000 hours or more of compensated work annually.
Employers have the option, but not the requirement, to provide lay employees scheduled for less than 1,000 hours of compensated work annually with a lay employee pension benefit.
Does the Lay Employee Pension System require parish schools, camps and conference centers, social service agencies, or other Episcopal institutions to participate?
Yes, if the employer is an ecclesiastical organization or body subject to the authority of this Church.
Societies, organizations, or other bodies not required to participate in the lay employee pension system may elect to participate in accordance with the regulations established by The Church Pension Fund.
What if a Church employer with eligible lay employees does not currently offer lay employee pension benefits?
The employer should adopt one of The Church Pension Fund’s lay employee pension plans as soon as possible. Implementation was required to be completed by January 1, 2013. The Church Pension Fund administers both a defined benefit plan and a defined contribution plan.
Will an employer be required to make retroactive contributions for employees based on an employee’s hire date if the employer does not currently offer lay employee pension benefits?
No. Resolution A138 states that retroactive contributions will not be required. However, the employer may elect to make retroactive contributions within the limits established by the Internal Revenue Code and the plan documents.
What if a Church employer currently sponsors a lay employee pension plan that is not a Church Pension Fund sponsored plan?
- The employer can continue an existing defined benefit plan as long as the plan delivers pension benefits not less than the pension benefits required by Resolution A138. The determination will be made by the Church Pension Fund. Annual certification will be required.
- The employer will be required to begin participation in a Church Pension Fund lay employee pension plan if the employer currently participates in a 401(a) plan, 401(k) plan, SEP IRA, 403(b) plan or other defined contribution pension plan. Implementation was required to be completed by January 1, 2013. (Note: There are IRS regulations that should be considered prior to terminating an existing defined contribution plan.)
What if a school employer sponsors a lay employee pension plan that is not a Church Pension Fund sponsored plan?
- If the school currently sponsors a defined contribution pension plan that is administered by TIAA-CREF and provides contribution levels equal to or exceeding those required by Resolution A138, that plan may be retained.
- Annual certification will be required.
- Schools that are not participating in a TIAA-CREF administered plan will need to adopt a Church Pension Fund lay employee pension plan or a TIAA-CREF plan. Implementation is required in accordance with Resolution C042.
Will employers that sponsor a defined benefit pension plan that is not administered by the Church Pension Fund be required to contribute a minimum of 9% of the covered employees’ compensation to the plan?
No. The financial condition of the plan will dictate the required contributions. As previously noted, the existing plan must deliver pension benefits not less than the pension benefits required by Resolution A138. Annual certification will be required, to be provided to the Church Pension Fund by the employer.
Does an employer who is already participating in a Church Pension Fund lay employee pension plan need to do anything?
There is nothing the employer needs to do if the employer complies with the contribution levels specified by Resolution A138 and all eligible employees are enrolled. Note, however, that effective January 1, 2013, age and length of service requirements are no longer permitted.
Are there requirements other than the scheduled compensated work requirement for employee participation?
No. All lay employees who are scheduled for 1,000 hours or more of compensated work annually are eligible to participate in the Lay Employee Pension System.
What if a lay employee’s scheduled hours decrease and he/she is now scheduled for less than 1,000 hours of compensated work annually?
The employer will no longer be required to contribute to a lay employee pension plan on behalf of the employee. If the employer adopted the Defined Contribution Plan, its adoption agreement may have to be amended to modify the employer contribution rate, but note that the employee can continue to make salary deferrals to his or her account. The employee can contribute to the RSVP if he or she is enrolled in the Defined Benefit Plan, provided the employer enrolls in the RSVP.
Must a lay employee with a vested retirement benefit from a previous employer participate in the Lay Employee Pension System?
Yes. All lay employees who are scheduled for 1,000 hours or more of compensated work annually must participate in the Lay Employee Pension System regardless of prior employment. Many of our current lay employees have worked outside the Church. Their Episcopal Church benefits will not be impacted by their prior employment.
Is there a way for employees to contribute to their retirement benefit if they are participating in the Defined Benefit Plan?
No employee contributions can be made to the Defined Benefit Plan. However, as long as the employer agrees to withhold and remit contributions, the employee can enroll and participate in optional tax deferred savings plans like the RSVP, which is sponsored by the Church Pension Fund.
Will employers be required to enroll employees in a Church Pension Fund-sponsored lay employee pension plan if their pension benefits are dictated by a collective bargaining agreement?
No. Employees whose pension benefits are dictated by a collective bargaining agreement will continue to receive pension benefits through the plan(s) specified by that agreement.
If the employer has lay employees who are scheduled for 1,000 hours or more of compensated work annually, implementation was required to be completed by January 1, 2013. It is the individual diocese’s responsibility to ensure compliance with Resolution A138, as it is with all General Convention resolutions and canons. The Church Pension Fund in its role as Plan Administrator will periodically provide to the diocesan bishops, and others who have been designated by the diocesan bishops, information regarding compliance with Resolution A138.
Defined Benefit Plan
The employer pays pension assessments. Assessments are required for eligible lay employees upon enrollment in the Plan.
The current assessment rate is 9% of the lay employee's assessable compensation.
For pension purposes, assessable compensation generally consists of all compensation listed in Box 5 of the Form W-2 plus any pre-tax contributions toward health and welfare benefits and an amount equal to the housing and utilities furnished to an employee that would not appear in Box 5 of the Form. This means that all overtime, bonuses, commissions and severance pay are included in assessable compensation. Compensation in excess of the applicable IRS limits are not subject to assessment.
Assessments should be sent to the following address:
The Episcopal Church Lay Employees' Retirement Plan
75 Remittance Drive
Chicago, IL 60675-6125
The assessments fund retirement benefits provided by the Defined Benefit Plan and the death benefit provided under the Episcopal Church Lay Employees' Death Benefit Plan. Assessments are not held in individual accounts. Rather, they are invested in a general fund of pooled contributions from all employees participating in the Defined Benefit Plan. These benefits do not fluctuate due to market performance.
Assessments are billed in advance, either monthly or quarterly, and are due when billed. Late payments may jeopardize a lay employee's benefits and may result in interest charges. Monthly reports are provided to employers that include the status of assessment payments and earnings information. Pension benefits are based on a lay employee's years of Credited Service and Highest Average Compensation. Each assessment payment adds to the lay employee's earned Credited Service. When assessments are unpaid, the lay employee's pension benefit will not accurately reflect his or her actual service. Remember, a lay employee's Credited Service is not based on years of service to the employer, but on the period of months and years of service for which assessments are paid throughout the compensated work history.
If assessments are unpaid for more than six months, benefits at risk include:
- The pre-retirement survivor benefit
- Disability retirement benefits
- The death benefit
- Accumulation of vesting and Credited Service
We rely on you and your lay employees for accurate information about earnings and changes in work and family status. Incorrect information places benefits at risk. Each assessment notice you receive provides space for earnings updates and employment changes. Every fall, lay employees receive a Personal Information Summary, which allows them to verify such information as name, address, beneficiary's name, etc., as well as earnings and Credited Service. The Personal Information Summary also provides each lay employee with an estimate of his or her retirement benefit.
Changes in compensation must be reported to Pension Services by completing section 3 of the assessment notice or by submitted submitting the Participant Change Form.
Contact Pension Services at (800) 223-6602. We'll re-compute the assessment notice.
Corrections to the Plan's earnings and/or employment records will only be accepted for two years following the year in which the earnings or employment change became effective. No retroactive earnings corrections will be accepted after the end of the second year following the year in which they became effective. However, assessments are due until retirement or death of the participant.
Sometimes the lay employee or former employer notifies the Church Pension Fund, but it's always best for you to verify the earnings, start date and other pertinent information with Pension Services by completing and mailing and Employee Application for Membership form. For example, you may want to contact Pension Services to determine whether the new employee has worked for a participating employer within the last 30 years, as the employee's prior service will count towards the employee's eligibility and vesting service.
No. Pension benefits are based on a formula that includes Credited Service and Highest Average Compensation over a period of years as two of the primary factors. Paying increased assessments has no effect on this formula. Further, inflating earnings for a short period of time to achieve a higher benefit would undermine the economics of the Defined Benefit Plan.
Lay employers wishing to supplement a lay employee's income in retirement may select from a wide range of annuity and investment products available in the market. Church Life Insurance Corporation offers several such products. Additionally, an employer may contribute to the Defined Contribution Plan, RSVP, or an Individual Retirement Annuity (IRA).
Yes, if compensation ends on the same date. However, if earnings continue under a severance agreement, then assessments must continue to be paid. Including Pension Services personnel in the planning process will help you and your lay employees make informed decisions under special circumstances.
Yes, provided that the lay employee does not work more than 1,000 hours during a calendar year. If the employee works more than 1,000 hours, benefits will be suspended and the employer is responsible to pay assessments on earnings. Lay employees may work at a non-participating employer with no restrictions on the place of employment or amount of compensation earned.
Yes, an employer can terminate participation in the Defined Benefit Plan. Terminating participation in the Defined Benefit Plan ends the employer's obligations to pay assessments for future earnings and service of its eligible employees. Any assessments due for service and earnings prior to the date of termination are still owed to the Church Pension Fund. Upon termination of the Defined Benefit Plan, employees will be fully vested in their benefits.
An employer may reactivate participation in the Defined Benefit Plan; however, employees will not receive credit for periods of service or earnings during any period of time that their employer is not participating in the Defined Benefit Plan.
What if we currently participate in another defined benefit plan? Can we transfer to the Lay Employee Defined Benefit Plan?
You cannot “transfer” your defined benefit plan assets to the Defined Benefit Plan, but you can enroll in the Defined Benefit Plan going forward. There are several issues for you to consider in doing so. Again, we suggest that you confer with your legal counsel and then call us at (855) 215-5990.
Defined Contribution Plan
After an employer enrolls in the plan, a lay employee who works for at least 1,000 compensated hours annually is eligible to participate with respect to employee contribution.
Employer contributions take two forms: the employer base contribution and the employer matching contribution. The employer base contribution must be at least 5% of the employee’s compensation. This amount is contributed regardless of whether an employee makes a contribution to his or her retirement account.
The employer matching contribution, on the other hand, is based on the employee making a contribution to his or her retirement account. The employer matches, dollar-for-dollar, each dollar that an employee contributes, up to at least 4% of the employee’s compensation.
Compensation typically includes all items of compensation reported in the box “Medicare wages and Tips” of the Form W-2, plus any pretax contributions to a cafeteria plan and an amount equal to the value of maintenance furnished to the employee (including utility and room and board expenses and the rental value of housing). All overtime, bonuses, commissions, and severance pay are generally included in compensation. Employees should ask their employers how contributions are calculated on their behalf.
Lay employees may make salary reduction contributions to the plan on a pretax basis or after-tax basis. Lay employees who are age 50 or older may also make pretax “catch-up” contributions to the plan. The limits for all employee contributions are established and periodically revised by the IRS. In addition to the limits established for employee contributions, the IRS imposes a limit on the total contributions, both employee and employer, made by or on behalf of each participant in the plan. Please refer to the enrollment guide for current year IRS contribution limits. The various contribution limits generally increase each year to reflect the increase in the cost of living. Certain exceptions to these limits may apply.
If you adopt the Defined Contribution Plan, you need to:
- Complete the Adoption Agreement and periodically update the adoption agreement to reflect any changes. These forms can be downloaded on the Enroll page. All employees complete and return Application for Membership forms to the Church Pension Fund.
- Ensure that contributions are remitted to Fidelity within a period that is no longer than is reasonable for the proper administration of the plan. IRS regulations suggest that, with respect to employee contributions, a reasonable period is 15 business days from the end of the month in which contributions are withheld from an employee's pay. With respect to employer contributions, you should also remit the amount specified in your adoption agreement within a reasonable period of time.
- Approve hardship and loan withdrawals upon employee requests for distributions from their accounts. In order to approve a hardship withdrawal, your organization must request documents evidencing an immediate and heavy financial need and a self-certification from the employee that he or she does not have any other sources from which to satisfy the need. Your organization should keep this supporting documentation in a safe place. Your organization will also be required to approve loan requests from employees.
If your organization is not a church or an elementary or secondary school that is controlled, operated, or principally supported by a church, you are considered to be a non-qualified church controlled organization (non-QCCO). You may also need to:
- Provide annual notice of the right to participate in the Defined Contribution Plan to all employees.
- Perform annual nondiscrimination testing with respect to any employer contributions (including matching contributions) or after-tax employee contributions made to the plan.
Please not that the IRS limits the total annual employer and employee contributions that can be made to a defined contribution plan. The Church Pension Fund monitors these limits and will notify you if your assistance is required to comply with these limits.
If a retirement plan does not comply with the Internal Revenue Code and IRS rules and regulations, the IRS could disqualify the plan, which would result in immediate taxation of participants’ accounts. For a defined contribution plan, these types of failures include violations of distribution restrictions, loans in excess of statutory limits, and salary deferrals and employer contributions in excess of the applicable limits.
Employee and employer contributions are always 100% vested.
You will receive a transmittal form from Fidelity Investments confirming the contribution amount remitted for the previous contribution period. The expected contribution is based on:
- the employee’s compensation,
- the base contribution percentage you elect,
- the employee contribution percentage elected by the employee, and
- your matching contribution percentage.
Space is provided for you to indicate the amount of the total contribution that pertains to each of the above categories as well as employee “catch-up” contributions (for those who attain age 50 and older by the end of the year) and employee after-tax contributions (for those who have exceeded their pre-tax contribution limits).
Contributions should be sent to:
The Church Pension Fund
c/o Fidelity Investments
P.O. Box 5000
Cincinnati, Ohio 45273-8686
All checks should be made payable to Fidelity Investments.
Our employees are currently covered by a defined contribution plan with another provider. How do I cease contributions to all other 403(b) plans and begin remitting all contributions to a Church Pension Fund plan?
If you want to remit all contributions to one of the Church Pension Fund defined contribution plans, you must notify your current vendor(s) of the change. You will need to work with each vendor to follow the necessary steps to properly cease contributions to your current plan(s) by the effective date of the change.
If I cease contributions to 403(b) contracts and custodial accounts, can the assets remain with the current vendor? What options and obligations do I have with respect to these assets?
If you decide to cease contributions/salary deferrals to certain vendors, the plan assets may remain with the vendor, or may be transferred to your current vendor, including one of the Church Pension Fund defined contribution plans, under the plan-to-plan transfer rules of the final 403(b) regulations. The employer is responsible for all fees incurred as a result of a transfer.
Some contracts may limit your ability to direct the transfer of employees’ accounts, limit the ability of employees to transfer their accounts, or impose such high transfer or termination fees that a transfer may not be a wise investment decision. Some employees may prefer to keep their accounts with certain vendors even after contributions have ceased. So long as assets remain with a vendor, the employer still has the responsibility to monitor fund performance and fees (except for individual contracts entered into by employees and frozen before December 31, 2008). The employer must also continue to monitor distributions from any frozen retirement plans — e.g., certify hardship withdrawals, coordinate loans from any frozen and active retirement plans and monitor minimum distribution requirements.
Contributions should not be sent in advance. They should be sent in arrears. If an employee contribution is made in advance and the employee terminates, the amount should be withheld from the employee’s final paycheck. An employer’s contribution made in advance for an employee who terminates needs to be “reversed.” Contact us at (866) 802-6333 and we will guide you through the process.
What if the employee salary or other information on the transmittal form is incorrect (e.g., terminated employees are included on the form)?
You must notify us in writing when an employee’s compensation changes or when an employee is terminated. A letter of instruction on diocesan or parish letterhead will suffice. You may also download the Participant Change Form.
I understand employee contributions are “pretax.” What does this mean and how do I compute the employee’s withholding?
No federal income tax (and in many states, no state income tax) is due on the amount an employee contributes on a pretax basis to his or her retirement account. However, Social Security and Medicare taxes (both the employee’s and the employer’s portion) must be paid on the employee contribution. Withholdings are based on the employee’s gross income reduced by the amount of the employee’s pretax retirement plan contribution. For example, if an employee’s gross income is $500 per week and the employee is contributing 4% of his or her pay on a pretax basis, the employee’s withholdings would be based on weekly earnings of $480 ($500 less 4% of $500, or $20). The amount the employer contributes to an employee’s retirement account is not included in the employee’s taxable income.
I know that employees can make after-tax (for those who have exceeded their pretax limits) and catch-up contributions (for those age 50 and older). What are the mechanics of this?
Employees who wish to make after-tax or catch-up contributions should notify their employer. After-tax and catch-up contributions can either be made in a lump sum, or can be deducted from the employee’s pay during each payroll cycle. The monthly transmittal form includes columns for after-tax and catch-up contributions. Employee after-tax and/or catch-up contribution amounts should be entered in the appropriate column, the amounts added to the employer base, the employee “normal” and the employer matching contribution, and the total amount remitted in one check made payable to Fidelity Investments. Catch-up contributions should be deducted from an employee’s pay on a pretax basis.
Employees establish a contribution amount (based on a percentage or dollar amount of their compensation) at the time they enroll in the plan.
An employee can change his or her contribution percentage by accessing his or her account through the internet by logging on to www.cpg.org/myaccount or by phoning our toll-free telephone number, (877) 208-0092. We compile a weekly report of all employee contribution changes and transmit them to the affected employer(s).
Enrolling in the Defined Contribution Plan is simple. You can download the Employer Adoption Agreement or obtain a copy by calling us at (855) 215-5990. Send the completed form to:
The Church Pension Fund
19 East 34th Street
New York, NY 10016
Attention: Pension Services
Once we receive your completed adoption agreement, we will enter your enrollment information and let you know that your enrollment is active. We generally process employer enrollments within 24 hours of receipt.
Enrollment is easy. The employee will need to complete an Employee Application for Membership form.
If enrolling in the Defined Contribution Plan, the employee will need to decide the percentage of compensation he/she would like to contribute. Please note that if the employee does not complete the employee contribution section of the form, he/she will automatically be enrolled at a 4% pretax payroll deduction. Both employee and employer contributions will be invested in the Fidelity Freedom K® Fund with the target retirement date closest to the year the employee might retire, based on his/her current age and assuming a retirement age of 65, at the direction of the Church Pension Fund. Please note that if we do not have a date of birth or an invalid date of birth, the contributions will be invested in the Fidelity Freedom K® Income Fund. The employee will receive a Welcome Kit from Fidelity that will indicate that he/she is now enrolled and will allow the employee to change their investment selections and payroll deduction if he/she wishes to do so. The Welcome Kit will include instructions on how to designate a beneficiary(ies).
Under the Internal Revenue Code, churches and qualified church-controlled organizations (QCCOs) are exempt from certain legal requirements that apply to non-QCCOs (including the non-discrimination and universal availability requirements). Your adoption agreement has questions for you to answer that will assist you in your determination of your QCCO or non-QCCO status. Below is a short discussion of the definitions of church, QCCO, and non-QCCO for your reference. If, after reviewing the adoption agreement, you need additional assistance to determine whether your organization is a church, QCCO, or a non-QCCO, please call us toll free at (855) 215-5990, Monday - Friday, 8:30AM - 8:00PM ET (excluding holidays) or e-mail us at firstname.lastname@example.org .
The term “church” includes a church, convention, or association of churches, or an elementary or secondary school that is controlled, operated, or principally supported by a church or association of churches. A “QCCO” is any church-controlled 501(c)(3) tax-exempt organization that does not generally offer goods, services, or facilities for sale to the general public and that receives less than 25% of its financial support from government grants or receipts from goods and services in related activities or business. Examples of a QCCO are a seminary or a social services organization that receives 80% of its support from a parish. “Non-QCCOs” are all other 501(c)(3) organizations qualified to participate in church retirement plans that are neither churches nor QCCOs. Examples of non-QCCOs are hospitals, universities, nursing homes, and retirement housing facilities.
Employees cannot self-approve a hardship withdrawal from the plan. The employer must request supporting documentation from the participant concerning the financial need, and a written representation from the participant that the need cannot be relieved from other sources. Based on this information, employers must consider whether to approve the hardship. In addition, all loan requests are required to be certified by the employer.
The Lay Defined Benefit Plan is a qualified plan under Section 401(a) of the Internal Revenue Code, but as a church plan, it is not subject to ERISA. The plan's financial condition is disclosed in the Church Pension Group Annual Report.
The Church Pension Fund, as sponsor of this plan, continues to monitor the funding status closely. Like many defined benefit plans, the Lay Defined Benefit Plan currently is not fully funded. The Church Pension Fund retains the right to amend, terminate or modify the terms of the Lay Defined Benefit Plan, including the employer assessment rate, without notice and for any reason.