Retirement Plan Reallocation 

What is the RCA Retirement Plan Reallocation Program?

The RCA Retirement Plan Reallocation program is an opportunity for an eligible participant with retirement savings in both retirement plans to consolidate their savings under one plan – the RCA 403(b) Retirement Program.

The consolidation is subject to strict Internal Revenue Code rules which dictate eligibility of a participant and the amount that can be reallocated to the RCA 403(b) Retirement Program in any given tax year.

What type of retirement plan does the Board of Benefits Services (BOBS) maintain for RCA employers and their employees/participants?

Until 2004, the plan in place was the RCA Retirement Plan, a non-qualified deferred compensation plan. Beginning in 2005, all employee and employer contributions have been contributed to the RCA 403(b) Retirement Program.

Fidelity Investments is the custodian for both the RCA Retirement Plan and the RCA 403(b) Retirement Program.

Why does BOBS  undertake the Reallocation Program each year?

BOBS feels that the potential advantages of the RCA 403(b) Retirement Program are compelling enough to provide an opportunity for participant funds to be transitioned out of the RCA Retirement Plan and into the RCA 403(b) Retirement Program for better retirement planning. 

The primary features of the RCA 403(b) Retirement Program are:

• Better funds protection due to the nature of the plan.
• Flexible distribution options such as payout, rollover or loan.
• Possibility of linking investment and distribution decisions.
• Greater availability of commercial annuities.
• Greater flexibility with tax withholding (housing allowance for clergy).

The primary features of the RCA Retirement Plan is:

• IRS Required Minimum Distribution(RMD) rules do not apply, but distributions must begin immediately upon retirement. 

Who is eligible to participate in this year’s Reallocation Program?

Anyone who worked for an RCA 403(b) Adopting Employer, which includes RCA churches, classes, regional synods, and other churches and institutions who adopted the RCA 403(b) Retirement Program for some or all of calendar (tax) year 2023 is eligible to participate.

Former employees of an RCA 403(b) Retirement Program Adopting Employer whose employment ended after January 1, 2019 are also potentially eligible to participate.

Final eligibility will be determined by BOBS based on the information submitted by the individual. The determination made by BOBS is final.

May I reallocate the entire balance of my RCA Retirement Plan account to my RCA 403(b) Retirement Program account?

The amount that can be reallocated to the RCA 403(b) Retirement Program in any given calendar year is subject to strict Internal Revenue Code Section 415(c) regulations. The amount that can be reallocated is based on your RCA taxable earnings for the year, the amount of housing allowance you claimed (if a minister) and the amount of contributions (employer and employee) made to your RCA 403(b) Retirement Program account for the year according to your records with Fidelity Investments.

The larger the balance in the RCA Retirement Plan, the less likely a participant will be able to reallocate the entire account balance in a single year.  

Can I get an idea on how the amount that will be reallocated is determined?

Per Internal Revenue Code Section 415(c) Annual Additions Limit, for calendar year 2023 the total contributions (sum of all employee and employer contributions except age-50 catch up contributions) for each participant may not exceed the lesser of $66,000 or 100% of your RCA “compensation”. In order to optimize the amount to be reallocated, additional compensation from prior calendar years may be included to meet the equivalent of twelve months of full-time work. Please note the tax-excludable clergy housing allowance is not included in the “compensation”.

For example, a participant worked full-time for the entire calendar year (2023) for an RCA church or RCA related organization. His or her 2023 compensation was $68,000 for the twelve months worked as reported on the 2023 W-2 or 1099, $8,000 employer contributions were paid into his or her RCA 403(b) Retirement Program. Then the amount that can be reallocated this year will be $58,000 (=$66,000-$8,000).

If I cannot consolidate all my retirement savings in a single year, will I be able to do so in the future?

While participation in a prior year does not automatically determine eligibility for a future year’s participation, BOBS intends to continue to offer participants the opportunity to reallocate funds in future years.

Do I need to do anything to participate in the reallocation project?

All potentially eligible participants will receive an electronic Information Collection Form on June 3, 2024 via DocuSign. The entire form must be completed and submitted for review by July 31, 2024. Once BOBS reviews the information submitted and determines whether the participant is eligible, an email will be sent by by August 9, 2024, notifying the participant of their eligibility status

Are there any tax consequences?

No. BOBS worked closely with Fidelity and outside counsel to structure this program and it was determined that there are no tax consequences for the transaction.

Will I receive a notification of some kind?

Yes. After you have completed and submitted the Information Collection Form, BOBS will follow up with you if additional information is needed. An email will be sent out by August 9 ,2024 to notify you of the amount that will be reallocated to your RCA 403(b) Retirement Program account for calendar year 2023 and when the reallocation transaction is expected to take place. Participants who are determined not eligible to participate, will also be notified via email.

What information will I need to provide?

You will need to provide the following:

1. Your work history at an RCA 403(b) Retirement Program Adopting Employer (which includes RCA churches, classes, regional synods, and other churches and institutions who adopted the RCA 403(b) Retirement Program) in 2023 and earlier if your employment ended before January 1, 2023.
2. Your taxable earnings for 2023 and earlier years from employment listed above. The taxable earnings are what is reported on the W-2 or 1099 or as filed if different.
3. The amount of Employee Contributions made to your account in the RCA 403(b) Retirement Program in 2023  – Optional
4. The amount of Employer Contributions made to your account in the RCA 403(b) Retirement Program in 2023 – Optional
   

Do I need to reallocate the full amount determined by the BOBS?

Yes.

When will this take place?

The electronic Information Collection Form for this year’s Reallocation Program will be sent out on June 3, 2024 via DocuSign. The last day to provide a fully completed form to the Board of Benefits Services is July 31, 2024.

Anyone who provides the requested information and is deemed eligible to participate in the program will have his or her funds reallocated to the RCA 403(b) Retirement Program no later than August 9, 2024.

How will my reallocated funds be invested under the RCA 403(b) Retirement Program?

The reallocated amount to the 403(b) Retirement Program will be invested the same way that your future employer contributions are invested per your election at Fidelity. If you have no such election on record with Fidelity, your reallocated contributions will be defaulted to the Fidelity Freedom K fund appropriate for your age. 

Are my investment options the same under both plans?

Yes.

Are there any investment and or market risks with this transaction?

As in prior years, the Board of Benefits Services will work very closely with Fidelity Investments to ensure that the transaction is completed expeditiously. Due to the nature of the transaction, funds reallocated will be out of the market for at least one business day. Corresponding investment and or market risks only apply to the amount reallocated.

Will I pay a fee for reallocating funds to the RCA 403(b) Retirement Program?

No. There is no fee for Reallocation.

What happens to my account under the RCA Retirement Plan once all my funds have been reallocated?

Once all the assets have been reallocated, your account will become inactive.

 

If you have any questions about the process, please contact Feifei Liu at (866) 221-5480 or via email at retirement@rca.org.