Benefits

Answers to Your Questions About Retirement

What is the basis of granting benefits? (Z 35)

The main factors that determine benefits amounts are the number of years of service credit, level of earnings, and marital status.

Where can a denominational employee get information regarding the monthly benefit rates which are currently in effect?

From the administrative or human resources office of his/her latest denominational employer.

On what date do retirement benefits begin? (Z 35 05)

Retirement benefits may begin on the first day of the month in which the vested participant becomes age eligible, if full-time denominational employment has been discontinued. As a general rule, no benefit shall be effective more than 12 months prior to the month in which the application is approved by the Retirement Plans Committee.

Are all participants of the Retirement Plan granted the same benefits? (Z 35 05)

No. The benefits differ depending on years of service credit earned, the level of earnings during the years of service, and whether the participant is eligible for a spouse allowance.

How are monthly benefits calculated? (Z 35 05)

The following formula is used to calculate benefits: Years of Service Credit x Benefit Rate Factor x Pension Factor = Single Life Benefit. The average of the 10 years during which the employee's Yearly Rate Factors were the highest will yield a Benefit Rate Factor of between .80% and 1.60%. This factor multiplied by the years of service credit (maximum of 40) determines the percentage of the current denominational pension factor that will be paid for a Single Life Annuity. Yearly Rate Factors from the Yearly Rate Factor Table are recorded on the service record.

Example: Juan Escobar has been a pastor for the Adventist Church. His ten highest years of pay were at 150% of the remuneration factor, yielding a Benefit Rate Factor of 1.30%. In his year of retirement, the Pension Factor was $2,225. The example gives benefits for a range of years of service credit under this Plan.

Years of Service Credit	Single Life Annuity	Spouse Allowance	SLA + SA	J&S + SA
5	$0.00	$0.00	$0.00	$0.00
10	$289.25	$0.00	$289.25	$260.33
15	$433.88	$0.00	$433.88	$390.49
20	$578.50	$144.63	$723.13	$665.28
30	$867.75	$325.41	$1,192.16	$1,106.38
40	$1,157.00	$578.50	$1,735.50	$1,619.80

Example Notes:

Single Life Annuity:	Years x Benefit Rate Factor x Pension Factor = Single Life Annuity, or Years x .013 x $2225 = SLA. Requires 10 years to vest. This is the benefit provided to a single retiree or a married retiree who waives the Joint & Survivor benefit.
Spouse Allowance:	Years x SLA x .0125. Requires a minimum of 20 years for eligibility. Also requires marriage to spouse for at least one year prior to retirement. Any employer-provided retirement benefits (other than SS) are subtracted from the Spouse Allowance. May be proportionalized for employees retiring after plan freeze in 1999
SLA + SA	Single Life plus Spouse Allowance. This is the monthly benefit provided for an employee who waives the Joint & Survivor benefit, providing no survivor, healthcare or death benefits to his/her spouse, and is eligible for a Spouse Allowance.
J&S + SA	Single Life x 90% plus Spouse Allowance. (Assumes spouse is within five years of age of retiree.) This is the monthly benefit provided for an employee who accepts the Joint & Survivor benefit and is eligible for Spouse Allowance.

Are the benefits taxable?

Monthly retirement benefits that are received from the Retirement Plan are taxable income. However, retirement benefits are not subject to Social Security tax. The one-time Retirement Allowance granted by this Plan is also subject to income tax but not Social Security tax. Retirement benefits paid directly by the employer to the employee are fully taxable.

Are retired ministers eligible for housing allowance exclusion or parsonage allowance exclusion for income tax purposes?

Yes. Monthly church provided pension income for retired ministers is considered as eligible for housing allowance exclusion. Annual instructions are sent to retired ministers assisting them in supporting this tax status.

Is the spouse of an employee eligible for retirement benefits? (Z 20 25, 30, 35)

There are several ways whereby a non-employee spouse may receive benefits from the Retirement Plan, usually upon the death of the participant.

Joint and Survivor Annuity:
When a Joint & Survivor retiree passes away, the spouse will be eligible to receive on-half of the Joint and Survivor Annuity as a survivor benefit, if that spouse was married to the employee for at least one year prior to his/her retirement. If the retiree's spouse dies first, the J&S benefits remain the same.

Yearly Rate Factor Table
Remuneration Percentage	Yearly Rate Factors	Remuneration Percentage	Yearly Rate Factors
165%+ 164 163 162 161 160 159 158 157 156 155 154 153 152 151 150 149, 148 147 146, 145 144 143, 142 141 140, 139 138 137, 136 135 134, 133 132 131, 130 129 128, 127 126 125, 124	1.60% 1.58 1.56 1.54 1.52 1.50 1.48 1.46 1.44 1.42 1.40 1.38 1.36 1.34 1.32 1.30 1.29 1.28 1.27 1.26 1.25 1.24 1.23 1.22 1.21 1.20 1.19 1.18 1.17 1.16 1.15 1.14 1.13	123 122, 121 120 119, 118 117 116, 115 114 113, 112 111 110, 109 108 107, 106 105 104, 103 102 101, 100 99 98, 97 96 95,94 93 92, 91 90 89, 88 87 86, 85 84 83, 82 81 80, 79 78 77, 76 75	1.12 1.11 1.10 1.09 1.08 1.07 1.06 1.05 1.04 1.03 1.02 1.01 1.00 .99 .98 .97 .96 .95 .94 .93 .92 .91 .90 .89 .88 .87 .86 .85 .84 .83 .82 .81 .80

Spouse Allowance:
Upon the death of a retiree, the spouse is eligible to receive a proportionate share of any spouse allowance being received by the participant based upon the number of the participant's years of service during which they were married, provided they were married during at least 10 years of the participant's service and the spouse is not receiving his/her own employer-funded pension.

Early Survivor Benefits:
If an active employee dies at a time when he/she could have retired and begun to receive early retirement benefits, and is survived by a spouse to whom he/she had been married for at least one year immediately preceding his/her death, the spouse is eligible for a surviving spouse early survivor benefit. This benefit equals the monthly amount which he/she would have received if the employee had been receiving a Joint & Survivor retirement benefit at the time of death, as well as any Spouse Allowance for which he/she might have qualified.

Survivor Spouse Benefit:
If an active employee dies prior to eligibility for any retirement benefits, the spouse will be eligible to receive survivor benefits calculated at the Joint and Survivor Annuity and any Spouse Allowance applicable when he/she reaches his/her normal retirement age, provided (a) the spouse had shared at least 15 years of his/her service credit, or (b) the spouse had at least 10 years of shared service credit and is able to qualify for a retirement benefit of his/her own service, or (c) the spouse had shared at least 10 years of service credit and was over 55 years of age at the time the employee died while in denominational service.

Early Reduced Survivor Benefits:
Spouses who are less than normal retirement age, but who otherwise qualify and are at least 55 years of age at the time of the employee's or participant's death, but who have not been employed on a regular basis and do not have suitable employment skills, may be granted early reduced survivor benefits. The reduction shall be 1% of the benefits for the rest of their lives for each full year that their age is below 60. This reduction shall apply to both the Joint and Survivor Benefit and the Spouse Allowance.

Special Situations:
Special rules govern situations where a surviving spouse was married to more than one employee and has been earning his/her own service credit.

Surviving Spouse Temporary Benefit:
If a full-time employee is survived by a spouse to whom he/she has been married for the past full year, that spouse, if employed less than 20 hours a week, will be eligible to receive temporary benefits if he/she either has a dependent child less than 8 years of age and not yet in elementary school, or is engaged for a period of not more than 24 months in acquiring skills to enable such a spouse to find employment.

Does this mean that surviving spouses are eligible to receive temporary benefits if they have small children? (Z 20 35)

Yes, but only if the spouse is employed less than 20 hours per week and only if the dependent child is less than 8 years of age, has not yet begun elementary school and if the spouse remains unmarried. Upon failing to fulfill any of these requirements, temporary benefits cease.

Is it true that any surviving spouse who has reached the age of 55 is eligible for retirement benefits? (Z 20 30)

No. Only if the spouse has been married to the employee for the full year prior to the employee's death and (a) if, at the time of his/her death, the employee was eligible for early retirement, or (b) the spouse is unemployed and does not have suitable employment skills and the requirements for shared service are met, or (c) the spouse is unemployed and has small children. (See previous question.)

Are Survivor Benefits terminated if the surviving spouse remarries? (Z 20 35 Z 20 60 Z 20 65)

No. Survivor Benefits, with the exception of the temporary benefits such as dependent child, tuition assistance and healthcare coverage, will continue even though the surviving spouse remarries.

Are employees or retirees eligible for assistance on moving expenses to their retirement home? (X 23 10)

The Retirement Plan does not provide assistance on this expense. In some cases the employing organization does not provide assistance. Your human resources office should be able to provide information on policy assisted moves.

What is the Single Life Annuity and how does an employee apply for it? (Z 20 40)

The Single Life Annuity provides retirement benefits to the participant only. At least 30 days prior to retirement benefit starting date an employee may file a written election with the committee to have his/her retirement benefits paid in the form of a Single Life Annuity. The spouse, who must countersign the election form, will receive no survivor benefits, health care expense assistance or other benefits on the basis of the employee's service credit. Without such an election, benefits to a married retiree are processed at the Joint & Survivor rate.

What happens to a Single Life Annuity at the death of the retiree?

The monthly benefit ceases immediately. No benefits are transferred to another family member.

What is Joint and Survivor Annuity? (Z 20 15)

A Joint and Survivor Annuity is automatically provided to participants who have been married to their spouses for at least one year prior to admission to the Plan, unless there is a special election made for a Single Life Annuity. The Joint & Survivor benefit is usually 10% less than the Single Life Annuity, depending on the age difference of retiree and spouse. That reduction in benefits pays for healthcare, death benefits and survivor benefits (if eligible) to be applied to the spouse, if the participant passes away before the spouse does.

What happens to the J&S Annuity if the participant passes away before the spouse does?

The monthly J&S Annuity is cut in half and becomes a survivor benefit to the eligible spouse.

What happens to the J&S Annuity if the eligible spouse passes away before the participant?

The J&S Annuity continues unchanged.

What happens if the eligible spouse passes away, and the participant re-marries, and then the participant passes away? Does the new spouse receive survivor benefits?

No. Only the spouse who was married to the retiree for one full year prior to retirement is an eligible spouse. Re-marriage does not impute survivor benefits to a new spouse.

What is the Spouse Allowance? (Z 20 20)

The Spouse Allowance is a conditional benefits enhancement designed to give special assistance only to a participant whose spouse has no personal plan. In order to be eligible for a Spouse Allowance, the participant must:

Have at least 20 years service credit.
Be married to a spouse to whom he/she has been married for the past full year.

The Spouse Allowance, as calculated, will be reduced by any employer-provided retirement benefits to the spouse. The Spouse Allowance is NOT the same as the Joint & Survivor benefit. It cannot be purchased.

How is the Spouse Allowance calculated? (Z 20 20)

The Spouse Allowance is calculated using the following initial formula:
1.25% x Years of Service Credit x
Single Life Benefit = Unadjusted Spouse Allowance The following adjustments will be applied to the Unadjusted Spouse Allowance:

The spouse allowance is reduced by any employer provided retirement benefits received by the spouse from his/her own employment other than Social Security benefits. A lump sum distribution shall be computed on the basis of a monthly annuity payable for life.
The spouse allowance is reduced by 1% for each full year above 5 that the participant's age exceeds the spouse's age.
For employees eligible to retire after 12/31/1999 with service under the defined contribution plan, the allowance is proportionalized by calculating a theoretical full-career allowance and multiplying it by a fraction including total years of service credit as the denominator and pre-2000 service credit as the numerator.

What happens to the Spouse Allowance upon the death of the participant?

The Spouse Allowance is recalculated upon the death of the participant to reflect the proportion of the years of shared service compared with total years of participant service credit.
Example: Joe and Jean Green were married for 30 of his 40 years of service credit. Jean had no benefits of her own. When they retired, Joe received a full, unreduced Spouse Allowance based on the years of Service Credit. Joe passed away before Jean did. Upon Joe's death, the Spouse Allowance was recalculated and multiplied by 30/40 to reflect that they had shared 30 of his 40 years of service credit.

What if an employee retires, and his/her spouse is still employed, and not receiving retirement benefits of his/her own. Is the participant eligible for Spouse Allowance?

Yes! But only until his/her spouse retires and becomes eligible for his/her own benefits. At that time the participant's unadjusted Spouse Allowance will be reduced or discontinued, depending on the amount of the spouse's benefits.
Example: Charlene retires after 40 years of working for the denomination. Her husband, Charles works for the state educational system and decides to continue work for another year. Since Charles is not receiving retirement benefits, Charlene is temporarily eligible for full Spouse Allowance. In another year, Charles retires, and his pension exceeds the total amount of Charlene's Spouse Allowance. The spouse Allowance is discontinued.

Is a retiree eligible to continue to receive the Spouse Allowance if his/her spouse dies? (Z 20 20)

No. The Spouse Allowance is continued for the month of death and two months following. It is then discontinued.

Can a Spouse Allowance be reinstated if the participant remarries? (Z 20 20)

No. The Spouse Allowance is only provided to a participant who has been married to his/her spouse for at least one full year before being admitted to the Retirement Plan.

What is the 'Family Plan?'

For participants whose benefits began before January 1, 1981, there was no Spouse Allowance. Instead there was a "Family Plan." Provision for the spouse of a participant was included in Family Plan benefits, but was not called 'Spouse Allowance.' While there are similarities in eligibility and benefits calculations, some special rules apply.

Are extra benefits available for children? (X 45 15) (X 45 18)

Through December 31, 1997, a parallel plan provided tuition assistance for the dependent children of retirees. Only employees who retired or were eligible to retire prior to January 1, 1998 continue to be eligible to receive this benefit for their dependent children.
The following eligibility criteria apply:

Retiree went directly from employment into retirement or died in denominational employment.
Retiree was eligible for tuition assistance from last employer.
Dependent child must be in a denominational educational institution.

The amount of the grant is 35% of tuition and other regular fees for day students and 70% for dormitory students based on 35 years of service credit. This grant is proportionately reduced for retirees with less than 35 years of service credit.

Does a retiring employee receive a lump sum payment in addition to retirement benefits? (Z 40 10 & X 45 12)

Yes. Employees who qualify for regular retirement benefits and who have earned the equivalent of at least half time service credit in each of the two years immediately preceding retirement will receive a Retirement Allowance from the Plan. For 40 years of service credit the allowance is equal to 5 months of basic remuneration. The allowance is proportionately reduced for service credit less than 40 years. The plan is required by the IRS to withhold 20% withholding taxes from payments made directly to the retiree. Up to 100% of the retirement allowance can be rolled over to an IRA or other tax sheltered annuity with no tax withholding. The requirement that employees go directly from active service into retirement in order to be eligible for a retirement allowance payable at the time regular retirement benefits begin may be waived if the following applies:

Termination of active employment was no more than 36 months prior to being eligible to receive retirement benefits, and
Termination of active employment was at the written recommendation of the last employer, and approved by the Retirement Plan Committee, or
The termination of active employment was due to the transfer of the spouse to a different location or because of retirement of the spouse, or
The Retirement Plan Committee, because of exceptional circumstance, approves a request of the employing organization to waive the requirement that an employee go directly from active service into retirement. The Retirement Allowance based on service after December 31, 1999 is paid by the employer directly to the employee and is not eligible for direct rollover.
Example: Joe Smith works for the church for 40 years and retires on December 31, 2007. He thus has 8 years after December 31, 1999 and 32 years prior. Joe is eligible to receive five months of basic remuneration upon retirement. 32/40 of that benefit will be paid by the Retirement Plan, and 8/40 by the employer.

If a participant is divorced from his/her spouse is there any provision for an allocation of benefits? (Z 35 07)

Often a divorce settlement will result in the issuance by the court of a Qualified Domestic Relations Order (QDRO). The Plan will follow the instructions of the court in reference to division of benefits. In cases where the courts have not made a determination of the ex-spouse's rights to retirement benefits, the Retirement Plan Committee is empowered to allocate the benefits between the two parties in harmony with approved guidelines.

Does the Retirement Plan provide a Death Benefit? (X 45 17)

Yes. Upon the death of a participant who has at least 10 years of service credit in the Church Plan, (and a participant's spouse who was eligible for joint and survivor benefit) a death benefit is paid from a parallel plan to the surviving spouse, or if there is no surviving spouse, to the executor of the estate, or to the person who has undertaken responsibility for the funeral arrangements. The amount of the death benefit for a participant with 40 or more years of service credit is the full pension factor in effect. For those with less than 40 years the allowance is the pension factor multiplied by years of service credit divided by 40.
Example: Christopher and Christine Martin are both retired. Christine was a school teacher for 32 years. Christopher was not a denominational employee. When Christine retired, she chose the Joint & Survivor benefit. Upon Christopher's death, Christine receives a death benefit. The calculation formula is Service Credit/40 x Pension Factor or 32/40 x $2,225 = $1,780 based on the factor in the year 2008. A few months later, Christine also dies. Her estate, or the person who cares for her funeral expenses will also receive a death benefit, using the same calculation and the Pension Factor in effect at the time of death.

What if a child is caring for the funeral expenses instead of the spouse. Can the benefit be given to the child?

No. If there is a spouse, the Plan must grant the benefit to that spouse.

Does the employee Accidental Death & Dismemberment policy, or life insurance policy continue upon my retirement?

Only if you converted those policies yourself upon retirement. These benefits are not provided by the Plan. If you do not arrange for a continuance yourself, these policies will lapse.

Are the benefit rates ever adjusted to compensate for cost of living changes?

Yes. Historically benefits have been adjusted annually to compensate for inflation. Notice of such a cost of living adjustment is given in the Reflections newsletter.