Frequently Asked Questions
Retirement Accounts after Death
Any amount in your account that has not been taken as a monthly income “annuity” benefit remains as balance that can be inherited by your designated beneficiaries. For annuitized amounts, the type of annuity you select will determine what happens to the benefit when you die. The most common selection is “Joint and Full”, meaning the same monthly benefit amount continues to be paid to the spouse and ceases only after death of the surviving spouse.
When you decide to take retirement income as an annuity, you are entering an insurance-like agreement that your applicable balance will be used to fund an income stream for the terms of the lifetime annuity. In other words, you’re transferring the risk of outliving your monthly income. Annuities are based on actuarially-sound estimates that cover the risks of a representative population.
Funds may be left in the account for eventual withdrawal or later annuitization, as desired. These funds will be subject to the IRS’s required minimum distribution (RMD) rules after age 70 ½. In short, fund balances are never “lost” but may either be maintained and payable as a death benefit or converted to monthly annuity income and distributed under the terms of the annuity selected.
Updating Contact Information
To notify FCMM of changes in your address, phone, or email, please call FCMM Client Services at (800) 995-5357.
Accessing Online Accounts
Not only can you review your account(s) online, you can change investment allocations within mutual fund families (i.e. within American Funds, Vanguard Funds, Timothy Plan Funds, or GuideStone Funds). You can login to your account by clicking the “Account Access” link at top of the FCMM website home page. For information about first-time log-in, please contact FCMM.
Frequency of Updates
While each Retirement Plan participant is mailed a quarterly statement reflecting the total of contributions and earnings/losses for the period for each Option, there is far more detail available when you access your account online.
FCMM-managed funds (Options C, D, E, and H) operate as collective funds. Your proportionate share in the collective funds is determined monthly. The previous month’s values and transactions are typically updated and posted by the third week of the current month.
Mutual fund (Options F-American, G-Vanguard, and J-Timothy and GuideStone) market values are updated daily, along with details of any transactions.
Sharing Account Information
FCMM Retirement Plan participants may decide to share their account information with another party. However, your information is kept private unless you authorize disclosure in advance. You can set up that permission by sending us a completed Form 12 Third Party Disclosure Authorization.
Once we receive the form, we can discuss your account with the authorized party, whether spouse, financial adviser, power of attorney (POA) designee, or other named individual. You may also grant the authorization for a limited duration.
Monthly Income Schedule
FCMM distributions take place monthly by direct deposit into your bank account on the first business day of the month.
1099R Tax Forms
Your 1099R form(s) are mailed by January 31 or the first business day following, each year. If you don’t receive yours within a reasonable time, please contact FCMM for a copy. For your information, Box 1 “Gross Distribution” lists the total amount. When distributions include housing allowance, Box 2A “Taxable Amount” is left blank and Box 2B “Taxable Amount Not Determined” is checked. Just like clergy filing with housing allowance while employed, the clergy taxpayer receiving FCMM distributions designated as housing allowance is responsible to keep supporting documentation and to report any taxable amount.
Required Minimum Distributions
Funds invested in a tax-advantaged retirement account, like FCMM, cannot be held there indefinitely. After you turn 72, you generally have to start receiving some of this deferred income and subjecting it to taxation. The IRS has an age-based formula to calculate your required minimum distribution (RMD). There are significant penalties for failing to withdraw the RMD.
If you have converted all of your retirement investment funds to an annuity (referred to as monthly benefit within FCMM), you no longer have RMD concerns. But if you annuitize only a portion, the remaining funds are subject to RMDs.
Your first RMD must be withdrawn by April 1 of the year following the year you turn 72. If you keep working beyond 72 for an employer who continues your participation in the FCMM retirement plan, you can wait until April 1 of the year after you terminate employment to receive your first RMD. Your second RMD, however, must be withdrawn by December 31 of the same year. For that reason – to avoid two RMD amounts stacked in the same year – FCMM encourages participants to take their first RMD in the year they turn 72. Each subsequent year’s RMD must be withdrawn by December 31.
Converting to an annuity partway through the year after you turn 72 will result in an RMD liability for that year. RMDs are calculated on the previous year’s December 31 non-annuitized balance, starting with the year you turn 72.
For more description of RMD calculation, see Approaching age 72? Here's what you need to know about RMDs and Required Minimum Distributions - Update 2021.
Your RMD withdrawal will be reported to the IRS via Form 1099R. Monthly Income Benefits (“annuity”) payments are also reported through a 1099R. RMDs, withdrawals, and annuity payments for clergy are reported as housing allowance eligible. See Quick Guide to Tax Reporting for Retirement Distributions - 1099R.
Monthly Income Benefits (“annuities”) calculated in the Retirement Plan
When a participant is ready to begin drawing all or some portion of accumulated FCMM retirement funds, a number of factors are used to determine the amount of the Monthly Income Benefit: the value being converted to a MIB, the age of the participant, the age of the participant’s spouse if applicable, current actuarial projections (published mortality tables), earnings rates, and the type of benefit selected. Then, a calculation matches a monthly payment to the actuarial longevity, so that on average, each participant’s account would reach zero at the end of the each annuitant’s actuarial life.
The MIB earnings rate is calculated on a base interest rate (fixed) plus a variable interest rate and the applicable actuarial table. Each Plan year annuity is considered a separate annuity with a distinct variable interest and mortality table. The variable earnings rate and the actuarial assumptions used at a participant’s benefit commencement date will be adjusted only in the case of extraordinary circumstances. Currently, MIB calculations are based on 4% interest (2% fixed; 2% variable) and the RP-2017 mortality table.
Note: We recommend contacting FCMM three months in advance or your anticipated MIB start date to ensure adequate processing time.
Designation of Housing Allowance
Any distributions from housing-allowance-eligible-contributed funds (i.e. funds contributed while a minister is eligible for housing allowance) in the Retirement Plan are designated by FCMM as 100% housing allowance eligible, whether taken as lump sum, recurring withdrawals, or taken as monthly income benefit ("annuity"). The recipient of eligible distributions must keep records of actual housing expense in order to document the amount of the annual payments that were actually used for housing expenses. The normal IRS guidelines (actually used for housing and not exceeding fair rental value) apply.
Any amount received above those qualified housing expenses would be subject to reporting as taxable income as part of filing your Form 1040 tax return. Status as a minister at the time of distribution is not required for the housing allowance exclusion; the status at the time of contribution is what determines eligibility.
Church Benefits / Finance / Administration
FCMM As Sole Provider
Current IRS regulations make it extremely difficult for an employer to coordinate multiple providers within a custom plan document, ensure administration of plan provisions, and consolidate information. Because violation of compliance would constitute an “operational failure” that would put both the employer and the FCMM Retirement Plan at risk, FCMM will not participate in a multiple vendor arrangement. As the sole provider of a local church’s retirement plan, FCMM is well equipped to serve as the plan sponsor and comply with the applicable rules. FCMM offers the opportunity for a church to provide a full-featured, compliant retirement plan, with the most favorable tax advantages, to all staff with the simplicity of our adoption agreement and no cost to the church. For more information see the FCMM website.
Accessing Retirement Plan Totals
The question likely comes from their underwriting process to estimate the church’s liability exposure as an employer. However, if your church is participating in the FCMM Retirement Plan, you are contributing to a multiple employer plan rather than an employer-specific plan maintained by the church – and the church does not carry risk for the plan administration. Giving this description should suffice for the question to be considered “not applicable”. The FCMM retirement plan document is available for download.