In case you missed my article last week, I have been talking about how caring for your pastor (October is Pastor Appreciation Month, after all!) goes beyond just simple acts of gratitude and even salary levels. Benefits play an incredibly important part in taking proper care of those shepherding our congregations. Last week, I covered healthcare and how the Alliance Health Plan can be utilized to meet your pastor’s needs and those of his family. If you want to learn more about that plan, I encourage you to attend one of our upcoming webinars on Nov 2nd or 3rd. But today, I’m going to talk about caring for your pastor’s financial future. Let’s talk about the Alliance 403(b) Retirement Plan…
Did you know that approximately 1/3 of pastors and clergy across the United States have less than $100,000 saved for their retirement?* The reality is that an individual needs far more to even generate a modest income in retirement. I regularly talk to Alliance pastors who either haven’t started saving for retirement yet and are far overdue in getting started or are simply not saving enough for their future needs. But our pastors can’t do it alone. Employer (church) contributions to a pastor’s retirement plan are just as significant as what the pastor is saving on his own. A 403(b) plan, like the Alliance Retirement Plan, is a great tax-advantaged vehicle for church and pastor to save for his future and his family’s future. This type of plan allows a pastor and a church to contribute far more to his retirement goals than an IRA or many other retirement vehicles.
While we know there are many choices in the retirement plan marketplace, I want to take a moment to outline some of the key benefits of the Alliance 403(b) Retirement Plan and why it is an important building block to your Alliance pastor’s benefit package.
- Low cost – The Alliance plan is structured so that the sponsoring employer – the church – pays no fees for participating in the plan. The only cost to the church is their portion of the contribution to the pastor or staff member’s account. Additionally, the plan fees paid by participants are incredibly low compared to most in the marketplace. Finally, to reduce the internal expenses of the investments used in the plan, we maintain a fund lineup with low expense ratios, no hidden fees, and an emphasis on strong net-of-costs performance.
- Investment Options – Speaking of investments, the Alliance plan offers 26 different investment options, including a values-based fund, a dozen diversified “target retirement date” funds, and the Orchard Alliance Fund (formerly ADF). The Orchard Alliance Fund is the most conservative option in the plan. It offers a competitive interest rate on the cash portion of your account while assisting in Kingdom-building work. Our participants even have the opportunity to have their assets managed by an advisor for a reasonable fee.
- Fiduciary Responsibility – All fiduciary responsibility for the investments is taken care of by the Alliance and the plan’s Investment Committee. The Investment Committee, along with the plan’s investment consultants, regularly reviews the investment lineup against the plan’s Investment Policy Statement and a rigorous screening process involving both quantitative and qualitative analysis.
- Housing Allowance – This is a HUGE advantage of the Alliance 403(b) plan over other vehicles. As a “church plan” under IRS rules, it allows us to designate all dollars within the plan as eligible for housing allowance upon distribution. If you qualify according to IRS rules and regulations, you can deduct qualifying housing expenses from your 403(b) withdrawals. This means that an official Retired Alliance Worker may be able to reduce the amount of taxes they pay in retirement by using this plan instead of, for example, an IRA.
These are just a few reasons why many Alliance churches enroll in the Alliance 403(b) Retirement Plan every month. If you are not a part of this plan and want to join the more than 500 Alliance churches already taking advantage of this important benefit, don’t hesitate to contact Alliance Benefits today at (800) 700-2651 or [email protected]. You can also learn more about the Alliance plan here: https://www.alliancebenefits.org/benefits/retirement/.
Grace and peace,
Curtis Farmer
Executive Director for Alliance Benefits
Curtis joined the Alliance Benefits team in September of 2017. Serving as Executive Director, he is responsible for the overall administration and direction of all aspects of Alliance Benefits, including the health and retirement plans for Alliance workers in the United States and internationally.
