FAQs

Introductory Questions

This page of Frequently Asked Questions answers many questions for those who already have a basic idea about RCRP and want more details. One of our officers prepared answers to more introductory questions for those wanting responses to basic concerns such as “Why save for retirement?” “How do I save for retirement?” “What is parsonage/housing allowance?” and “What is a ‘church plan’ like RCRP?”  As a "first step," we suggest downloading our Retirement Planning For Rabbis and Cantors FAQ created by RCRP Board member Rabbi Robert Tabak.

Please note – All responses to the FAQs below and the Retirement Planning For Rabbis and Cantors FAQ linked above are presented as general educational information. For specific tax or legal advice, consult your personal advisor. Specific investment counseling is available from Fidelity representatives, and is available to all participants in the Plan.

1. Why should Jewish clergy join a retirement plan designed for clergy instead of a regular plan such as an IRA?

Through participation in a qualified clergy retirement plan such as the RCRP, clergy are become eligible to receive disbursements from their accounts in retirement as a housing allowance (parsonage) They also have the flexibility to designate larger yearly contributions to the Plan than if they were contributing to a Traditional IRA.

2. Why should Jewish clergy join the Rabbis and Cantors Retirement Plan [“the Plan”] instead of another clergy plan?

The Rabbis and Cantors Retirement Plan offers access to low-cost index funds available through Fidelity, no required membership in a specific rabbinical or cantorial association, control of your own investment decisions, and it’s 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. that is overseen 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 housing allowance (parsonage) for its participants in accordance with IRS regulations.

5. How often is the website updated with new information?

The last major revision of this website was posted March 15, 2018. Subsequent minor updates are made periodically.

Investment Questions

6. 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.

7. 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. Fidelity currently offers 198 different investment options to Plan participants.

8. What are the socially responsible investment (SRI) options?

We currently offer Fidelity’s two SRI funds:

Fidelity® U.S. Sustainability Index Fund (FENSX)
Fidelity® International Sustainability Index Fund (FNIYX)

Fidelity does not yet offer an SRI bond fund. The RCRP board hopes to add additional SRI investment options in the future.

Annual Fees

9. What are the costs to participate?

The RCRP currently incurs administrative expenses of about $14K per year, including legal expenses and liability insurance. To cover these costs, the Plan collects a modest annual fee from each participant, scaled to the amount invested as follows (as of July 2018):

Asset AmountRegular FeeReduced Fee
Under $10K 180
$10K – $49,9997236
$50K – $99,99914070
$100K – $249,999200100
$250K – $349,999300200
$350K - $499,999400300
$500K - $999,999500400
>$1 million700600

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 a reduced portion 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 for further information on costs and fees for specific funds.

Transferring Funds

10. 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 invested in other retirement plans that were earned 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 our sign up page for forms.

11. 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, 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:
    IRA One-Rollover-Per-Year Rule
    IRS Clarifies Application of One-Per-Year Limit on IRA Rollovers

Defining “Exercise of Ministry”

12. 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

NOTE: Below is an informal summary of current IRS contribution limits, which can change annually. Please refer to IRS 403(b) Contribution Limits for further details (including limits for current year-end contributions).

13. 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 2018, the limit (set by the IRS) for contributions made in this fashion goes up to $18,500 for those who will not yet be 50 years old as of December 31, 2018. The limit for those who will be 50 years old or older as of December 31, 2018, is $24,500.”

14. Suppose I want to contribute more than $18,500 (or $24,500, 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 2018 is $55,000 (or 100% of your compensation, not including any parsonage/housing allowance), whichever is lower. In 2018 the figure is $61,000 if you will be 50 years old or older as of December 31, 2018.

15. 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.

16. Can I make contributions to the Plan directly?

It depends on where you work:

  • 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).
  • 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 $55,000 (or $61,000) limit.
  • 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.
  • 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).

Eligibility

17. 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 those duly ordained as rabbis and cantors are eligible to be considered as “ministers of the Gospel” for purposes of the tax code, and eligible to receive a housing allowance /parsonage designation.

18. 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.

Approaching Retirement

19. 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. Fidelity will report as housing allowance any properly designated withdrawals in an annual statement. Please complete this form to request that your distributions be designated as parsonage.

20. When I reach age 70 ½ am I required to withdraw some retirement funds each year?

Yes. Required minimum distributions, or RMDs, are mandatory, minimum yearly withdrawals that generally must be taken starting in the year you turn 70½. While there is a minimum amount you are required to withdraw in order to avoid severe penalties, you can withdraw more than the RMD amount.

RCRP funds are 403(b) accounts. For RMD purposes, you cannot combine 403(b)s and IRAs; you must take RMDs from each category separately.

Learn more here: Fidelity can help you calculate your RMD

Also check the Internal Revenue Service’s FAQs

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 is your own fund and is as safe (or at risk) as the fund of anyone else invested at this major mutual fund company.

Legal Updates

22. Does the tax reform law passed in December 2017 affect clergy parsonage/housing allowance?

There are no specific provisions in the new legislation that affect clergy or those employed by religiously affiliated institutions. Whatever impact a rabbi or cantor experiences will likely be the same that other taxpayers experience.

23. What about a recent federal district court decision holding that housing allowances for clergy were unconstitutional?

There was a court decision to that affect by one district court in Wisconsin in October 2017. The decision is under appeal as of December 2017, and for the present there is no change in federal law or tax policy. The housing allowance will continue in force until all appeals are resolved. This case is likely still years away from conclusion. The RCRP board and legal counsel will continue to monitor this situation. A more detailed update is included in a January 2018 mid-year letter to participants.

Learning More and Participating

24. 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."

25. How do I sign up?

Follow the directions on our Sign Up page.

Enter your keyword: