Your Retirement Plan allows several methods for receiving your accumulated funds. The contributions you and/or your employer made over the years can be taken as income distributions (after minimum age of 59 1/2) to provide for your living expenses in later years.
A popular form of distribution is the monthly income benefit (MIB, often referred to as an “in-plan annuity”), which converts a sum of money in your retirement account to a level payout each month. The MIB can be used to provide consistent retirement paychecks to you and, if you choose at the time of commencement, to the surviving spouse. See Form 36 Monthly Income Benefit and Annuity Descriptions in the Forms & Documents section of the FCMM website for more information.
While many retirement plans don’t offer such an in-plan annuity, the FCMM Plan has always offered this option. And it’s not just available for Option C (the Conservative Growth with Annuity Benefit Fund), but for any funds in any investment Option of FCMM. You may take any sum of money from one or more Options to fund a MIB. (Please see this article on Option C as it relates to MIB/annuity and lump sum distributions.)
The MIB/annuity approach offers level income, but it does not provide cash liquidity outside of monthly payouts; once an amount is converted to an annuity there is no cash balance. For that reason, some participants prefer to “self-annuitize” by requesting recurring cash withdrawals to meet income needs. Each monthly payout reduces the cash balance, meaning there is no assured lifetime income since a person may outlive the resources. As long as a cash balance remains, a member may access it for one-time distributions as well.
When funds are not converted to MIB or an annuity, they are subject to IRS rules for Required Minimum Distributions (RMDs). (See FAQs for a description of RMDs.) If recurring or other cash withdrawals don’t at least equal RMD calculations, then an additional distribution must be taken for the difference.
However, if you are employed by an FCMM-participating church past the age of 70 1/2, you are not subject to RMDs until you leave that employment.
For ministers whose contributions were made while eligible for housing allowance, your distributions is designated by FCMM as housing allowance, subject to the normal IRS guidelines. This housing allowance benefit is available to the member but not to the surviving spouse.
Funds that are rolled out from FCMM Retirement Plan typically lose the housing allowance benefit.
Forms of Retirement Plan Distributions:
- In-Plan Monthly Income Benefit ("annuity")
- Recurring monthly cash withdrawals
- One-time (or from time-to-time) cash withdrawals
- Cash withdrawals to meet IRS Required Minimum Distributions