Benefit Promises Don’t Trump Adoption Agreements

You may want to provide certain perks and benefits—including retirement plan contributions—when you make an employment offer. Before making any promises, make sure that what you’re offering is allowed under the retirement plan document and your specific adoption agreement.¹

Your adoption agreement details all of your plan elections, including eligibility, vesting, contribution rates and contribution types. This document remains in effect and enforceable until you cancel the plan, amend your plan elections by submitting a new adoption agreement or the General Board discontinues the plan. Since it may have been signed many years ago, it’s possible that your organization’s adoption agreement may not reflect the needs of your current workforce. While the adoption agreement provides many options, what you plan to offer a new employee may not be an available option.

It’s also possible that the individual who is making employment offers may not be aware of what the plan document or your organization’s adoption agreement contains. Even if a promise is made and an employee accepts a position based on an expectation of benefits, those benefits cannot be provided unless they are allowed under the plan. To violate the adoption agreement and/or plan document would be illegal.

Agreements You Can Stand Behind
To ensure your employment offers are in line with what benefits are available under your plan, make sure you:

1. Review your adoption agreement
2. Educate your hiring staff regarding its provisions

In lieu of making an offer that is not allowed under the plan, consider ways to compensate the employee outside of the plan. For instance, if you planned to offer retirement contributions to a certain employee starting the first day of employment but your plan requires a one-year wait, consider offering a one-time bonus in an amount equal to what you would have contributed to the plan, adjusted for taxes.

We’re Here to Help
A copy of your current adoption agreement may be available electronically in Benefits Access Portal, our plan sponsor account management site. You can also contact the General Board directly for a copy or for help understanding your adoption agreement, to update your plan elections to better meet your organization’s needs, or to find alternatives to planned employment offers. Contact the General Board with questions or concerns at 1-800-851-2201 and ask to speak with Retirement Services.

¹ Note: Certain organizations (e.g., hospitals, nursing homes, schools, etc.) may not meet the definition of a qualified church-controlled organization and may be subject to other legal limitations on their plan, such as non-discrimination requirements that prohibit benefits to highly-compensated employees that are in excess of those offered to other staff.

IRS Retirement Contribution Limits Increase for 2015

In 2015, employees may contribute up to $18,000 (up from $17,500) in before-tax participant contributions to retirement savings plans or $24,000 (up from $23,000) if the employee will be age 50 or older by the end of 2015. Participants with 15 or more years of Church service may make an additional annual before-tax contribution of $3,000; however, eligibility requirements and lifetime limits apply. If an employee has more than 15 years of service and wants to contribute more than $18,000 this year or $24,000 if he or she will be age 50 or over, that employee should contact the General Board at 1-800-851-2201 for a 403(b) Contribution Planner to determine the maximum contributions that can be made to his or her account.

Total contributions—before-tax, after-tax and plan sponsor contributions (if any)—cannot exceed the lesser of $53,000 (up from $52,000) or 100% of total compensation (not including housing allowance amounts). Additional over-age-50 contributions do not count toward this limit.

Help Employee Retirement Savings Keep Pace with Compensation Changes

The General Board promotes percentage-based contributions, rather than flat-dollar amounts, as the best method for making sure retirement savings keep pace with changes in compensation. This is especially important for employees who may be eligible for conditional or matching contributions from their employer, conference and/or local church to ensure they meet the minimum required employee contribution rate for a conditional contribution or to maximize their matching contributions.

If you have employees who still prefer set dollar amounts, remind them that contribution amounts should be reviewed periodically and changed as their compensation increases.

Encourage Employees to Save More
The new year is a good time to encourage employees about the value of saving for retirement and to increase their retirement contributions. We provide promotional materials to help you communicate to your participants, including the Saving for Your Future brochure, and offer guidance from a professional financial planner at no charge from EY Financial Planning Services at 1-800-360-2539.²

² Costs for these services are included in the General Board’s administrative expenses that are paid for by the funds. Services are available to active participants and surviving spouses with account balances, and to retired and terminated participants with account balances of at least $10,000.

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