1. Why should Jewish clergy join a retirement plan designed for clergy instead of a regular plan?
– Eligibility for parsonage in retirement
– Flexibility to designate larger yearly contributions than with a Traditional IRA
2. Why should Jewish clergy join the Rabbis and Cantors Retirement Plan [“the Plan”] instead of another clergy plan?
– Access low-cost index funds available through Fidelity
– No membership in a rabbinical or cantorial association required
– Control your own investment funds
– Run by a non-profit organization, dedicated to the best interest of plan participants
3. Who runs the Plan?
The Plan is run by a non-profit corporation, The Rabbis and Cantors Retirement Board, Inc. The corporation is run by a volunteer board of directors, as detailed in About the Plan.
4. Legally, what is the Plan?
The Plan is a 403(b)(9) plan (a “church plan” in IRS language). The Plan rules allow Jewish clergy from all denominations to participate. As a church plan, the Plan has advantages over regular 403(b) plans, including being able to designate distributions in retirement as parsonage (housing allowance) for its participants in accordance with IRS regulations.
5. If I participate, where and how will my money be invested?
Please note that RCRP cannot give tax or investment advice. Each participant opens an individual account which holds all the participant’s contributions at one of our participating vendors.
There is no “RCRP investment” determined by the Plan. As a participant, you can allocate your funds directly with Fidelity and can invest in most Fidelity mutual funds. You can hold multiple funds at Fidelity. You can also choose socially responsible investment (SRI) options through Aspire (see #7 below).
6. What types of investments are available through Fidelity (our primary account vendor)?
Investments include stocks, bonds, domestic, and international funds. They include index funds (until June 2016 called Spartan funds), actively managed funds, and target-date funds based on an anticipated date of retirement. Each participant makes his/her own decisions about investments.
7. What are the socially responsible investment (SRI) options?
Fidelity’s SRI options are very new; they do not yet have an investment track record or include a bond fund. Meanwhile, RCRP has arranged to offer three time-tested TIAA mutual funds—Social Choice Bond, Social Choice Equity (U.S. stocks), and Social Choice International Equity—through the Aspire investment platform.
As soon as arrangements are finalized, we will post a full update with new SRI investment instructions. At that time, RCRP participants currently invested in the Vanguard FTSE Social Index Fund will be asked to transfer their SRI assets to one or more of the TIAA funds listed above on the Aspire platform.
8. Can I invest in both Fidelity and through Aspire, or must I choose one?
You can invest in either or both. Investments through Aspire are limited to the three TIAA funds listed above.
10. What are the costs to participate?
The RCRP currently incurs administrative expenses of about $7K per year, including legal expenses and liability insurance. To cover these costs, the Plan charges a modest annual fee to each participant, scaled to the amount invested as follows:
|Asset Amount||Regular Fee||Reduced Fee|
|Less than $10K||$18||No Fee|
|$10K – $49,999||$72||$36|
|$50K – $99,999||$140||$70|
|$100K – $249,999||$200||$100|
|$250K – $349,999||$300||$150|
|$350K and up||$350||$175|
The “Reduced Fee” is assessed to Plan participants who are members of organizations that make annual contributions of financial support to RCRP (currently the Alumni Association of the Rabbinical School of Hebrew College, Reconstructionist Rabbinical Association, OHALAH, Yeshivat Chovevei Torah, and Academy for Jewish Religion-California). Participant members of these organizations pay only half of the regular fee once the individual’s account reaches $10K in assets. No fee is assessed until the account reaches that level.
This fee schedule compares favorably with other clergy retirement plans. In addition to the annual fee, all mutual funds available through our vendors have additional underlying costs and fees. Please consult Fidelity or your SRI account vendor (see above) for further information.
11. If I have an IRA (or another retirement plan) already, can I transfer it (“roll it over”) into the Plan?
Yes, but be aware that the parsonage benefit in retirement applies only to funds earned in the other retirement plan while engaged in your rabbinate or cantorate. (See the question on “exercise of ministry” below.)
- Participants who want to transfer funds from an existing IRA or 403 (b) to the RCRP need to fill out an RCRP form certifying that these funds were earned in the course of professional work as a rabbi or cantor. The form is available here.
- Participants will also need to fill out a transfer form from the mutual fund receiving the transferred funds. See forms page.
12. Is there any limit to the amount that can be transferred (“rolled over”) from an IRA or 403 (b) fund to the Plan?
No, there is not. However, rules regarding transfers are more complex since 2015 due to a court decision affecting the IRS regulations. We recommend consulting a tax professional for advice.
In general, we are aware of these points.
- The term “rollover,” often used for any kind of transfer between one retirement account and another, now has a specific meaning for the Internal Revenue Service. Not all retirement fund transfers are rollovers.
- Each taxpayer is limited to one rollover per 12-month period (an individual 12 months, not a calendar year.) There are significant financial penalties for violating this rule.
- The number of transfers that are NOT rollovers is not limited by the IRS.
- Transfers directly from one mutual fund to another mutual fund (“trustee to trustee”) are not considered a “rollover,” unlike funds made personally payable to an individual.
- Our best understanding is that transfers within RCRP funds (for example from an RCRP Vanguard account to an RCRP Fidelity or Aspire account), if made directly from one mutual fund to another mutual fund (“trustee to trustee”), are not considered rollovers.
- Here are links to recent IRS policies on rollovers/transfers:
DEFINING “EXERCISE OF MINISTRY”
13.What clergy compensation qualifies as “exercise of ministry?”
According to the IRS, “exercise of ministry” for rabbis and cantors includes the following:
- Performing sacerdotal functions
- Conducting religious worship
- Controlling, conducting, and maintaining religious organizations
- Performing services at a church-related hospital or health and welfare institution, or a private nonprofit hospital
- Writing religious books or articles
Please refer to IRS Publication 517 for further information.
CONTRIBUTIONS AND LIMITS
14. What is the upper limit of the amount that my employer can withhold from my compensation and contribute instead on my behalf to the pension plan?
In 2016, the limit (set by the IRS) for contributions made in this fashion is $18,000 for those who will not yet be 50 years old as of December 31, 2016. The limit for those who will be 50 years old or older as of December 31, 2016, is $24,000
15. Suppose I want to contribute more than $18,000 (or $24,000, if applicable) to the plan. Can I do that? If so, how?
In addition to contributions withheld from your pay, your employer (or, if you don’t work for a synagogue, yourself) can contribute additional amounts to the plan. The total annual contribution limit to the Plan (set by the IRS) in 2016 is $53,000 (or 100% of your compensation, not including any parsonage allowance), whichever is lower. In 2016 the figure is $59,000 if you will be 50 years old or older as of December 31, 2016.
16. Suppose I am contributing to another retirement plan at the same time. How would that affect the foregoing figures?
The total contribution limits set forth above are for funds contributed to all qualified plans (not just this Plan). If you are contributing (or your employer is contributing) to another plan, you can still join the Plan but the total global contributions cannot exceed the relevant number above.
17. Can I make contributions to the Plan directly?
It depends on where you work:
a. If you work for a synagogue, the synagogue has to “adopt” the Plan (we have a simple online form for that) and only the synagogue can send in the contributions (both employee ones and employer ones).
b. If you don’t work for a synagogue (technically, if you don’t work for a church 501c3 organization), then you can join the Plan directly (and the employer does not have to sign the adoption agreement). This means you can send in contributions on your own up to the $53K (or $59,000) limit.
c. If you work for a 501c3 (but not a church 501c3), you have a choice: you can ask your employer to join, or you can contribute directly.
d. If you work for a for-profit entity (for example, as a chaplain for a for-profit hospital), you have to contribute directly, because a for-profit cannot adopt a 403(b) plan).
18. I serve as a chaplain, though I am not an ordained or invested rabbi or cantor. Am I eligible to participate?
Not at this time. Under the rules established by the IRS and affirmed by decisions of the Federal courts, only duly those ordained as rabbis and cantors are eligible be considered as “ministers of the Gospel” for purposes of the tax code, and eligible to receive a housing allowance /parsonage designation.
19. I am ordained as a Maharat and have not chosen the title “Rabbi.” Can I still participate?
The RCRP board has determined that a Maharat is the equivalent of a rabbi or cantor for purposes of participation in the Fund. See list of eligible ordinations/graduations.
20. I am a participant approaching retirement age. Is there anything that I should know?
Contact our office well in advance. Requests for designating parsonage/housing allowance must be made in advance, normally by November 1 in the prior year. Because of differing reporting policies, any withdrawals that are to include parsonage (housing allowance) should come from Fidelity. Please complete this form to request your distributions be designated as parsonage.
ARE FUNDS GUARANTEED?
21. Does the Pension Benefit Guaranty Corporation (“PBGC”) provide a guarantee that will protect my funds?
No. The PBGC provides protection only for pensions that are offered by employers as defined benefit pensions [e.g., 2% of salary for each year of employment will be paid in a pension upon retirement]. This Plan is a defined contribution plan. No insurance is available for such plans, nor is any required. Your fund at Fidelity and/or Vanguard is your own fund and is as safe (or at risk) as the fund of anyone else invested at those major mutual fund companies.
LEARNING MORE AND PARTICIPATING
22. Has the press written about the Plan?
See “Pension Extends Coverage to More Rabbis” in The Forward.
The New York Times has cited our Plan as an example of “How to Fix A Retirement Plan at a School or Nonprofit“:
“The…Rabbis and Cantors Retirement Plan serves two purposes: It is a model for those who are unhappy with the fees and investment choices in their current plan, and it allows others to get a plan where they previously had none.”
23. How do I sign up?
Follow the directions on our How to Participate page.
24. When was this web site updated?
Major revisions were made on May 26, 2016 (Lag B’Omer 5776). Minor edits are made periodically.