The Church Retirement Plan

The Church Retirement Plan
403(b)(9) Retirement Plan for Southern Baptist Churches The Church Retirement Plan is a plan designed exclusively for Southern Baptists by GuideStone Financial Resources as part of its commitment to serve those who serve the Lord by assisting in financial preparation for future retirement. A12-1

Average life expectancy in the U.S.
THE CHURCH RETIREMENT PLAN The Retirement Years: Men Average 65 years Women Men Average 79 years For most Americans, the retirement years will encompass a significant portion of their lives. People today must save more to provide for a longer life span in retirement than previous generations. Adding 14 years since 1950, the average life expectancy in the United States is now 79 years and is continuing to rise. It is critical to carefully prepare for finances during this stage and to begin that process as early as possible. Unfortunately, many people put off saving for the future because of their current expenses and end up having to drastically change their standard of living later. Women Average life expectancy in the U.S. Source: Centers for Disease Control and Prevention, as of January 24, 2013. A12-2

THE CHURCH RETIREMENT PLAN
Retirement Income Need 70–90% of preretirement income to continue lifestyle Sources: Social Security Pensions Personal savings Continued employment Retirees typically need 70–90% of their preretirement income to continue their lifestyle. For most people, this retirement income is comprised of Social Security, pensions, personal savings and continued employment. Depending on your personal financial circumstances, you could need more. A12-3

Retirement Income Sources
THE CHURCH RETIREMENT PLAN Retirement Income Sources Social Security Full benefits at 67 if born 1960+ Average benefit $1,294 per month Pension Many companies no longer provide Personal savings Eroding effect of inflation However, the full retirement age for receiving Social Security benefits is now 67 if you were born in 1960 or after. And, the average individual retirement benefit from Social Security is only $1,230 per month. Many companies no longer provide the traditional “defined benefit” pension, leaving the responsibility for saving up to the employee. Add to that the eroding effect of inflation on your retirement savings and the task of preparing for the future can be a frightening undertaking. Source: as of January 1, 2014 A12-4

Preparation for Retirement
THE CHURCH RETIREMENT PLAN Preparation for Retirement Begin early Save consistently How can you put together the right amount of savings in order to live comfortably in your retirement years? The key is to begin as early as you can and to save consistently. A12-5

THE CHURCH RETIREMENT PLAN Preparation for Retirement Start today! Goal: $200,000 8% earnings rate Age $ 88/month Age $210/month Age $580/month This chart illustrates the monthly contribution you would need in order to create a nest egg of $200,000 at age 65, assuming an 8% compounded annual return, and beginning the process at ages 30, 40 or 50. Notice the longer you wait to get started, the more money you will have to contribute. Rate of return is purely hypothetical and not representative of any specific type of investment. A12-6

THE CHURCH RETIREMENT PLAN Preparation for Retirement Tax-advantaged investment for employees of Southern Baptist churches Although it can seem a challenging task, we are fortunate to have investment plans available to help us invest for retirement that also offer potential tax advantages. This presentation introduces our retirement plan developed to help employees of Southern Baptist churches take ownership of and prepare for their futures. A12-7

GuideStone Financial Resources serving since 1918 403(b)(9) Retirement Plan for Southern Baptist Churches — The Church Retirement Plan Building on a legacy of service that began in 1918, GuideStone Financial Resources continues to provide products and services that address the financial needs of those employed by Southern Baptist organizations. This includes a retirement plan tailored to your needs: The 403(b)(9) Retirement Plan for Southern Baptist Churches, also known as the Church Retirement Plan. A12-8

Who can participate? Anyone with taxable income from a Southern Baptist church, church-related school or association Ministers or non- ministerial staff Full-time, part-time or bivocational This plan is available to anyone who receives taxable income from a Southern Baptist church, church-related school or association. This includes both ministers and non-ministerial employees as well as persons who are considered either full-time, part-time or bivocational. Whether you are a pastor, teacher, office personnel or on the maintenance staff, you have an opportunity to invest in your future through the Church Retirement Plan. A12-9

What is it? 403(b) — tax code designation for non-profit organizations Similar to: 401(k) — for-profit businesses The Church Retirement Plan is identified by the tax code designation 403(b) given to retirement plans for non-profit organizations. This plan is similar to 401(k) plans that are used by employees of for-profit businesses. A12-10

Preretirement contributions and earnings Postretirement distributions
THE CHURCH RETIREMENT PLAN What is it? 403(b) tax code designation Tax-sheltered plan Preretirement contributions and earnings NOT TAXED Postretirement distributions TAXED A “tax-sheltered” plan like this allows participants to defer the payment of taxes on all their contributions and investment earnings until they take a distribution from their account at retirement. A12-11

What is it? 403(b) tax code designation Tax-sheltered plan
THE CHURCH RETIREMENT PLAN What is it? 403(b) tax code designation Tax-sheltered plan Defined contribution plan Small amount invested in contribution plan Small income payment The Church Retirement Plan is also a “defined contribution plan.” This means the size of your income at retirement is defined by the contributions and earnings accumulated in your account during your working years. In simple terms, if you invest small amounts in a defined contribution plan, you will likely have a small income. The larger your contributions and earnings while you are working, the larger your income payment may be when you retire. Larger amount invested in contribution plan Larger income payment A12-12

Why use it? No sales commissions
THE CHURCH RETIREMENT PLAN Why use it? No sales commissions 100% of your contributions are invested into your account With thousands of investment options available for ministers and church employees, why should they use this plan? First, the Church Retirement Plan has no sales commissions. This means 100% of the money you contribute is invested directly into your account. A12-13

Why use it? No sales commissions Reduction of taxes
THE CHURCH RETIREMENT PLAN Why use it? No sales commissions Reduction of taxes Employee contributions: Deferral of income taxes Exclusion from Social Security taxes for ministers This plan may also help you reduce your taxes. Income taxes are deferred on plan contributions and investment earnings, and contributions by ministers are also excluded from Social Security taxes. A12-14

THE CHURCH RETIREMENT PLAN Why use it? No sales commissions Reduction of taxes Higher contribution limits than IRA Participants who are serious about maximizing tax savings possibilities will like the fact that tax-sheltered contribution limits are much higher in this 403(b) plan than with an IRA. In fact, in the Church Retirement Plan you may be able to shelter up to 100% of your taxable income under certain conditions! A12-15

THE CHURCH RETIREMENT PLAN Why use it? No sales commissions Reduction of taxes Higher contribution limits than IRA Income may be designated as housing allowance for ministers in retirement Distributed tax-free An additional advantage is available to ministers in retirement as they may be able to request their income to be designated as a housing allowance. All such amounts used within legal limits to provide a home are distributed tax free. A12-16

THE CHURCH RETIREMENT PLAN Why use it? No sales commissions Reduction of taxes Higher contribution limits than IRA Income may be designated as housing allowance for ministers in retirement Added benefits and contributions for eligible participants Disability and life protection benefits Matching retirement contributions The Church Retirement Plan doesn’t just help you save taxes while you invest for tomorrow, it also provides valuable features that can help protect you and your family today. If you are eligible, these features include disability and life protection benefits and matching retirement contributions. They will be discussed in detail in a moment. A12-17

THE CHURCH RETIREMENT PLAN Why use it? No sales commissions Reduction of taxes Higher contribution limits than IRA Income may be designated as housing allowance for ministers in retirement Added benefits and contributions for eligible participants Christian-screened investment options Proven investment management firms Through the Church Retirement Plan you have access to Christian-screened investment options that do not invest in companies that are publicly recognized as providing products or services in the liquor, tobacco, gambling, pornography or abortion industries. GuideStone uses proven investment management firms to manage these plan investment options. A12-18

Contribution Sources Employer Recommended goal: 10% of employee’s monthly income Contributions into a Church Retirement Plan account can come from three sources. Your employer can make a contribution. The amount of this contribution is set by your employer, but a goal of 10% of an employee’s monthly income is recommended. A12-19

Contribution Sources Employer Recommended goal: 10% of employee’s monthly income Employee Salary reduction Employees can also make a contribution as a plan participant. You do this by asking your employer to reduce an amount from your monthly pay that is directed into your account as a tax-sheltered contribution. Employee contributions can be made on a before- or after-tax basis. In addition, after-tax contributions can also be made as a Roth elective deferral. Plan flexibility allows you to contribute any amount within legal limits. A12-20

Contribution Sources Employer Recommended goal: 10% of employee’s monthly income Employee Salary reduction Rollover Other retirement plans or IRA A rollover contribution from money you may already have invested in other retirement plans or IRAs is also possible. Rollovers can usually be done with no tax consequences, and GuideStone personnel are available to assist with the process. A12-21

Contribution Sources Employer Recommended goal: 10% of employee’s monthly income Employee Salary reduction Rollover Other retirement plans or IRA Baptist state convention Matching retirement contribution As previously mentioned, a third type of contribution is provided to eligible participants by Baptist state conventions in the form of a matching retirement contribution. A12-22

State Convention Contributions
THE CHURCH RETIREMENT PLAN State Convention Contributions Disability Income Benefit Up to $500 a month disability income In addition to insurance or Social Security Contributes to retirement account $35 each month of disability benefit The disability benefit provides up to $500 a month in disability income to an eligible plan participant who becomes disabled. This benefit is paid in addition to any disability insurance or Social Security benefits. Every month this disability benefit is paid, a $35 contribution is also made into the retirement account of the disabled participant. A12-23

THE CHURCH RETIREMENT PLAN State Convention Contributions Disability Income Benefit Survivor Protection Benefit Amount paid to beneficiaries determined by participant’s age at death Can equal as much as $100,000 Paid in addition to participant’s retirement account balance The survivor benefit is similar to life insurance. If an eligible participant dies while active in the plan, his or her beneficiaries receive a survivor benefit. The amount is determined by the participant’s age at death but can equal as much as $100,000. This benefit is paid to survivors in addition to the participant’s retirement account balance. A12-24

THE CHURCH RETIREMENT PLAN State Convention Contributions Disability Income Benefit Survivor Protection Benefit No medical underwriting required Provided at no additional cost Both the disability income benefit and the survivor protection benefit require no medical underwriting prior to approval and are provided at no additional cost to an eligible participant or church. A12-25

THE CHURCH RETIREMENT PLAN State Convention Contributions $105.00 $1 for $3 matching retirement contributions (maximum $17.50) Your monthly contribution level $52.50 For every $3 contributed each month in excess of $52.50, $1 in matching convention contributions is provided to eligible participants, up to a maximum monthly convention contribution of $ To receive this maximum amount, eligible participants must have employer and/or participant contributions equal to at least $105 per month. Protection benefits — Disability Income Benefit and Survivor Protection Benefit $1.00 A12-26

THE CHURCH RETIREMENT PLAN State Convention Contributions Church: must meet convention requirements Ministers: are eligible for benefits Non-ministers: may be eligible for benefits Matching contribution: determined by state convention For a plan participant to receive these state convention provided benefits and contributions, their church must meet eligibility requirements established by their convention, such as giving financial support to the Cooperative Program. Ministers of a qualifying church are eligible to receive the disability and survivor benefits. Non-ministers may be eligible if they meet certain convention criteria. Conventions also decide if matching retirement contributions are provided and which participants will be eligible to receive them. Check with GuideStone or your convention office for details. Visit for eligibility information. A12-27

How the Plan Works Example: $3,000 monthly income
THE CHURCH RETIREMENT PLAN How the Plan Works Example: $3,000 monthly income Now let’s pull everything together to see how this plan would work for an eligible participant with a monthly income of $3,000 from a church. A12-28

THE CHURCH RETIREMENT PLAN How the Plan Works Example: $3,000 monthly income $ employer contribution (10% goal) In this example the church decides to follow the recommended goal of contributing 10% to the employee’s account, or $300 each month. This money comes from church-provided funds and is not reduced from the participant’s salary. A12-29

THE CHURCH RETIREMENT PLAN How the Plan Works Example: $3,000 monthly income $ employer contribution (10% goal) $ participant contribution The participant in this example also contributes an additional amount by asking the church to withhold 5%, or $150, each month from his or her salary as a tax-sheltered contribution. Most participants will want to contribute more, but this is a good start. A12-30

THE CHURCH RETIREMENT PLAN How the Plan Works Example: $3,000 monthly income $ employer contribution (10% goal) $ participant contribution $ state convention contribution We will assume this participant meets all state Baptist convention eligibility criteria, so the convention will provide the valuable disability and survivor benefits and contribute an additional $17.50 directly into the participant’s retirement account. A12-31

THE CHURCH RETIREMENT PLAN How the Plan Works Example: $3,000 monthly income $ employer contribution (10% goal) $ participant contribution $ state convention contribution $ total This makes a total monthly contribution of $ This amount is used to purchase shares of the investment fund or funds selected by the participant. A12-32

Contributions Purchase Shares
THE CHURCH RETIREMENT PLAN Contributions Purchase Shares Monthly Contribution Fund NAV Shares Purchased Total Shares Account Value $467.50 $10.00 46.75 $ For this example, let’s assume the participant invests in only one fund and that it has a net asset value, or NAV of $10 per share. This means the first contribution of $ would purchase shares. Hypothetical example for illustration purposes only, not indicative of future performance. A12-33

THE CHURCH RETIREMENT PLAN Contributions Purchase Shares Monthly Contribution Fund NAV Shares Purchased Total Shares Account Value $467.50 $10.00 46.75 $ $ 9.75 47.95 94.70 $ In the second month, let’s assume the NAV for our participant’s fund has declined in value from $10 to $9.75. While this might seem like a negative situation, it does have a positive side. This month, the $ contribution can purchase more shares of the fund because the price per share is lower. When these shares are added to those from last month, the participant now owns total shares. At the present NAV of $9.75 these shares are now valued at $ Hypothetical example for illustration purposes only, not indicative of future performance. A12-34

THE CHURCH RETIREMENT PLAN Contributions Purchase Shares Monthly Contribution Fund NAV Shares Purchased Total Shares Account Value $467.50 $10.00 46.75 $ $ 9.75 47.95 94.70 $ $10.25 45.61 140.31 $1,438.18 In the third month, let’s assume the fund rebounds to $10.25 per share. While that is good, it also means fewer shares are purchased because the cost of each new share is more than it was last month. But the rebound in value also impacts the value of the shares already owned. So, the shares now owned at the end of the third month are all valued at $10.25 per share, for a total account value of $1, Hypothetical example for illustration purposes only, not indicative of future performance. A12-35

THE CHURCH RETIREMENT PLAN Contributions Purchase Shares Monthly Contribution Fund NAV Shares Purchased Total Shares Account Value $467.50 $10.00 46.75 $ $ 9.75 47.95 94.70 $ $10.25 45.61 140.31 $1,438.18 The up and down movement of a fund’s NAV is called volatility, and in most stock or bond funds, this is a common experience. An important key to investing in plans like this is to select the investment fund or funds that best fit your long-term investment goals, without getting distracted by any short-term volatility. More detailed information about plan investment funds and their share value is available through GuideStone. Hypothetical example for illustration purposes only, not indicative of future performance. A12-36

Investment Fund Selection
THE CHURCH RETIREMENT PLAN Investment Fund Selection One-choice approach GuideStone Funds MyDestination Funds® Asset allocation approach GuideStone Funds Asset Allocation Funds Build-your-own approach GuideStone Funds Select Funds GuideStone Financial Resources Capital Preservation Fund We are committed to providing our participants with the best possible options for choosing their investments. As a result, GuideStone’s emphasis on investment choice will be “approach,” rather than “product oriented.” The three options for investment assistance will be: (CLICK TO REVEAL EACH STEP IN THE BUILD) “One-choice” approach — use of the age appropriate MyDestination Funds® as the single fund solution. “Asset allocation” approach — utilize GuideStone Funds Asset Allocation Funds. “Build-your-own” approach — utilize fund literature to create and maintain your unique mix of GuideStone’s Select Funds. (NOTE: Capital Preservation Fund for SBC participants only) A12-37

The MyDestination Funds attempt to achieve their objectives by investing in the GuideStone Select Funds. These funds are managed to a retirement date (“target date”) by adjusting the percentage of fixed-income securities and equity securities to become more conservative each year until reaching the retirement year and then approximately 12 years thereafter. The target date in the name of the funds is the approximate date when an investor plans to start withdrawing money. By investing in them, you will also incur the expenses and risks of the underlying Select Funds. The principal risks of the Funds will change depending on the asset mix of the Select Funds in which they invest. You may directly invest in the Select Funds. The Funds’ value will go up and down in response to changes in the share prices of the investments that they own. There is no guarantee that the Funds’ principal value will increase, including at the targeted date. It is possible to lose money by investing in the Fund. The Asset Allocation Funds attempt to achieve their objectives by investing in the GuideStone Select Funds. By investing in these Funds, you will also incur the expenses and risks of the underlying Select Funds. The principal risks of the Funds will change depending on the asset mix of the Select Funds in which they invest. You may directly invest in the Select Funds. The Funds’ value will go up and down in response to changes in the share prices of the investments that they own. It is possible to lose money by investing in the Funds. A12-38

Getting Started in the Church Retirement Plan
Church Retirement Plan application Rollover application Information kit Online at Call GUIDE ( ) Monday–Friday, 7 a.m.–6 p.m. CST Getting started in the church retirement plan is really quite simple. First, you need to complete a plan application. Second, if you already have money in another 401(k) plan, 403(b) plan or a Traditional IRA, you can roll it into the Church Retirement Plan by completing a rollover application. Consolidation can simplify your investment life. All of these forms are included in an information kit that can be ordered online at or by calling the toll-free number. GuideStone customer service representatives are available every business day from 7 a.m. to 6 p.m. CST to answer your questions or assist you with completing any or all of the required forms. A12-39

Mission/Church Assistance Fund
THE CHURCH RETIREMENT PLAN Mission/Church Assistance Fund Annual church budget under $75,000 Up to $3,000 additional retirement contributions If you are a pastor and you serve a church or mission that has a total annual budget of less than $75,000, you may also be eligible to receive up to $3,000 in additional retirement contributions through GuideStone’s Mission/Church Assistance Fund. Ask one of our customer service representatives about this added financial help available for small churches and missions. A12-40

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The Church Retirement Plan

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