Retirement Plan Reallocation FAQ
What type of retirement plan does BOBS maintain for RCA employers and their employees/participants?
Until 2004, the plan in place was the RCA Retirement Plan. Under IRS regulations it is a Deferred Compensation plan.
It was replaced in 2005 by the RCA 403(b) Retirement Program.
Both plans, the RCA Retirement Plan and the RCA 403(b) Retirement Program are administered by Fidelity.
What is this Reallocation Project?
It is an opportunity for a participant with retirement savings in both retirement plans to consolidate all the savings under one plan – the 403(b) plan.
The consolidation is subject to strict IRS rules which dictate eligibility and the amount that can be reallocated to the 403(b) plan in any given tax year.
Why would I want to do this?
- Advantages of the 403(b) plan
- Better funds protection due to the nature of the plan.
- More flexible distribution options such as payout, rollover, loan.
- Possibility to link investment and distribution decisions.
- Greater availability of commercial annuities
- Greater flexibility with tax withholding (housing allowance)
- Advantage of the RCA retirement plan
- IRS Required Minimum Distribution(RMD) rules do not apply
Who is eligible?
Anyone who worked for an RCA Church or RCA related organization for some or all of calendar (tax) year 2016 and whose employer has adopted the 403(b) plan.
Also potentially eligible are former employees of an RCA Church or RCA related organization whose employment ended after January 1, 2012 and whose employer has adopted the 403(b) plan.
Final eligibility will be determined by the Board based on the information submitted by the individual and the information available to the Board. The determination made by the Board is final.
May I reallocate the entire balance to my 403(b) plan account balance?
The amount that can be reallocated to the 403(b) plan in any given tax year is subject to strict IRS rules. It is based on your taxable earnings for the year, the amount of housing allowance you are claiming (if a minister) and the amount of contributions (employer and employee) made to your RCA 403(b) account for the year per Fidelity records.
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. The dollar amount that can be reallocated will be determined in accordance with IRS 415(c) regulations.
If I cannot consolidate all my retirement savings in a single year, will I be able to do so in the future?
The Board initiated this reallocation process to the 403(b) plan in 2015, relating to tax year 2014. Any reallocation to be done in 2017 will be for tax year 2016.
It is the intent of the Board to offer participants to reallocate funds to the 403(b) plan in future years.
Will I need to reelect next year if I want to reallocate funds to the 403(b) plan?
You will need to confirm your interest in this reallocation transaction annually. Furthermore the Board will need to collect salary information from you for any future year you wish to reallocate funds to the 403(b) plan.
Do I need to do anything to participate in the reallocation project?
A participant in the RCA retirement pan first must complete the Expression of Interest form that was sent by e-mail. This is Step 1. The Board will review the information submitted and determine whether the participant is eligible.
If eligible the participant will receive a second form (entitled Reallocation Enrollment) to complete. Completing and submitting this form is Step 2. The Reallocation Enrollment form must be received by the Board no later than August 18, 2017 in order for the participant to be eligible to participate in the reallocation project for tax year 2016.
Are there any tax consequences?
The Board, working closely with Fidelity and outside counsel, has structured the transaction such there will be no tax consequences for participants who elect to reallocate.
In addition the Board is taking necessary steps to confirm participants’ eligibility and the amount to be reallocated in any given tax year.
Will I receive a confirmation of some kind?
After you have completed the Expression of Interest form and submitted it to the Board, the Board will follow up with you within 10 – 15 business days.
If you elect to participate, complete the Reallocation Enrollment form and submit it to the Board by the specified deadline. You will receive a confirmation letter that will confirm (1) the amount to be reallocated to your RCA 403(b) plan account for tax year 2016 and (2) when the reallocation is expected to take place.
Why do I need to complete two forms?
The first form, Expression of Interest, is sent to everyone who is potentially eligible to give all the opportunity to consolidate their RCA retirement savings.
The second form, Reallocation Enrollment, is a more extensive form that will provide more information about the transaction and will gather necessary information from you for the Board of Benefits Services to (1) determine and confirm your eligibility and (2) determine the amount you may be able to reallocate for tax year 2016. The Board only needs such information from those who elect to participate.
What information will I need to provide?
The information collected will assist the Board to determine your eligibility and the amount you may be able to reallocate to the RCA 403(b) plan.
The board will need to know about the following:
- Your work history at a RCA church or related organization in 2016 or earlier if your employment ended before January 1, 2016.
- Your taxable earnings for 2016 or earlier year if your employment ended before January 1, 2016. The taxable earnings is that as reported on the W2 or 1099 or as filled if different.
Do I need to reallocate the full amount determined by the board?
Yes, for the year you have elected to reallocate funds to the 403(b) plan. In future year a participant may decide not to reallocate any funds to the 403(b) plan.
When will this take place?
The last day to provide a fully completed Reallocation Enrollment form to the Board is August 18, 2017.
Anyone eligible and who has elected in will have his/her funds reallocated to the RCA 403(b) plan no later than October 13, 2017.
How will my reallocated funds be invested under the RCA 403(b) plan?
The reallocated amount to the 403(b) plan will be invested the same way 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 Target Date fund appropriate for your age.
You may want to confirm with Fidelity your investment election on record.
Are my investment options the same under both plans?
Are there any investment and or market risks with this transaction?
As in 2015 and 2016, the Board of Benefits Services will work very closely with Fidelity Investments to ensure 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 apply to the amount reallocated.
What happens to my account under the RCA retirement plan once all my funds have been reallocated?
Your account under the RCA retirement plan will become inactive.
Will I pay a fee for reallocating funds to the 403(b) plan?
Should I discuss this with anyone?
The board encourages you to discuss all of this with any individual you deemed appropriate and trust. It could be a tax advisor or a financial planner.
You may also contact Fidelity at (800) 343-0860.
Finally do not hesitate to contact the board with any questions as follows: Claude Bussieres at 212-870-2892 or Feifei Liu at 212-870-3244 or call 1-866-221-5480 or submit your question by email at email@example.com.
For example on how to complete Step 2, please click here.