Advantages of Using FCMM
The FCMM Retirement Plan offers many unique advantages to employers and to participants. The plan is open to all staff members of qualifying employers, whether credentialed clergy or not. Advantages include:
- Multiple Investment Options
- Flexible Retirement Benefits
- Professional Financial Counsel
- Housing Allowance Tax Benefit
- Full IRS Compliancy Assured
- Minimal Administrative Work
- And more.
Multiple Investment Options
- FCMM offers a wide variety of investment options. Whether a participant prefers to manage his or her investments or to let others manage them, FCMM has an option that can work for his or her retirement investment strategy. We seek to provide the best investment options to our participants. Investment Options include
- FCMM-Managed Funds:
- Conservative Growth with Annuity Benefit Fund (Option C)
- Moderate Growth Stock Fund (Option B/D)
- Diversified Bond Fund (Option E)
- Self-Directed Mutual Funds:
- American Funds (Option F)
- Vanguard Funds (Option G)
- Adjustable Rate Investment (Option H) through Christian Investors Financial
- FCMM-Managed Funds:
- Investment allocations can be set at any combination of percentages among these options and can be changed at any time. (Please note the Options B and C may receive employer contributions only; Option D may receive employee salary deferrals only; all other Options may receive employer or employee contributions.)
- A detailed explanation of these options and their investment strategies is available in the Investment Option Descriptions (Form 31). There is also a complete listing of the approximately 30 American Funds (Form 04) and 80 Vanguard fund choices (Form 05) available through FCMM.
Flexible Retirement Benefits
- At retirement time, an FCMM participant can choose how he or she draws on the benefits. Option C is designed to provide a monthly annuity benefit. The strength of an annuity is its guarantee of lifetime income. The monthly benefit is determined by a number of factors including the overall value of one’s account, one’s age (and possibly a spouse’s age), and the type of annuity that is chosen. These options are explained in the FCMM plan document.
- Money in the other fund options is not required to be annuitized. This enables self-management of retirement resources, drawing on them as needed.
- Many may choose a combination that allows for some annuity benefit and some continuing self-management of resources during retirement years. That’s part of the flexibility available through FCMM.
- FCMM encourages all of its participants to seek objective professional financial counsel in regard to retirement investments and benefit choices. Wise investment efforts and the tax advantages of a denominational church retirement plan also help our participants achieve their goal of providing for retirement.
Professional Financial Counsel
- The FCMM managed funds (Options B, C, D, and E) provide participants access to funds managed by professional investment advisors who are selected and overseen by the FCMM Board of Trustees. The overall investment strategy is built on a goal of long term growth. The mutual funds managed by American Funds and Vanguard also represent market performers.
- We encourage pastors and other staff members to seek the advice of an objective, trained financial counselor who can provide guided assistance in the area of personal stewardship matters including retirement planning. For participants using the FCMM managed options (B, C, D, and E) and/or American Funds (Option F), our partner the Alliance Benefit Group provides financial consultation as well. Vanguard Funds (Option G) are geared for the actively engaged investor.
- Participation in such a retirement program early in one’s ministry provides the discipline of faithfully setting aside money for retirement. Such investing grows incrementally over the years and usually far outgains efforts to "catch up" later in life.
Housing Allowance Tax Benefit
- For credentialed pastors and commissioned missionaries, FCMM can designate retirement income as tax-free "housing allowance."
- This increases the value of the retirement benefit by 15% or more because this tax deferred money is again sheltered from federal and state income taxes in retirement. Non-church investment groups cannot offer this advantage. Care should be taken in examining this housing allowance issue carefully. There are some non-denominational retirement plans presently claiming to offer clergy this housing allowance benefit although the basis for this promise is very uncertain, given present IRS tax guidelines.
Full IRS Compliancy Assured
- When new IRS regulations for all 403b retirement plans went into effect in 2009, FCMM had in place the necessary legal documents and reporting resources required of churches and other ministries in maintaining full compliancy with the IRS in the area of employee retirement benefits.
- As a 403(b)(9) denominational church plan, FCMM can save a church or ministry significant time, energy, and legal fees in trying to "do it on our own." FCMM provides greater savings and flexibility than any 401(k) or 403(b)(7) plan can provide.
Minimal Administrative Work
- Operating expenses are lower than in most plans - with no direct fees charged to the employer.
- FCMM does much of the employer administrative work, record keeping, and communication.
Other Reasons to Choose FCMM:
Tax-Free Savings
All employer and employee contributions (unless Roth) are tax-deferred compensation for income tax purposes. There are certain limits on contribution amounts set yearly by the IRS.
- SECA (Self Employment Contributions Act) requirements do not apply to FCMM.
- Social Security will likely provide only a portion of one’s retirement needs.
- FCMM maximizes the tax-free advantages available only to denominational retirement plans.
Percentage Based
We encourage churches or other employing ministries to contribute a certain percent of individual salary to this program. As salary (or support) increases, so can the contributions to a retirement program. This helps one keep up with inflation in the long term. A church/ministry can start at 1% per year, but we encourage churches to provide 10% for pastoral staff.
Death Benefit
If one dies before retirement, a death benefit of the full value of one’s account is available to the designated beneficiaries.
Portability
- If one moves to another EFCA ministry, the new employer can continue contributions to one’s account. If one leaves an EFCA ministry, his/her account remains within FCMM but remains the possession of the participant as an eventual retirement benefit.
- Hardship withdrawals are available but are subject to all the IRS regulations and the FCMM plan document requirements.
Growth
- Retirement investments in Option C currently receive a 3.5% return. The FCMM Board of Trustees adjusts the return when economic and stock market conditions require. Option C money is designed to be annuitized at retirement though may be withdrawn after the application of a Fair Market Value Factor.
Low Fees and Potential Account Value Increases
- Generally our fees are lower than most investment programs. Much of this is due to the fact that FCMM is a nonprofit organization. Since the program exists solely for the benefit of its members, we are able to pass along any increases to participants, whether already retired or still employed.
- Our office staff stands ready to provide information and assistance as needed. Web access provides immediate information for all our participants 24/7.
For more information, contact the Director of Marketing, Rev. Bud Smith at (800) 995-5357 or fcmm@efca.org or any of the FCMM Staff.
