Pension and Retirement Plans

 

IRS Announces 2016 Pension Plan Limitations
10/21/2015

The IRS recently announced limitations for pension plans and other retirement-related items for tax year 2016. Participants will be able to make before-tax contributions of up to $18,000 or $24,000 if they are age 50 or older—unchanged from 2015. Participants who have 15 or more years of service with a “qualified organization” also may be able to contribute up to an additional $3,000 (subject to a $15,000 lifetime limit and other rules).
 

Total contributions—including annual before-tax and after-tax contributions, and plan sponsor contributions—may not exceed the lesser of participant taxable compensation or $53,000 for 2016. The additional contributions for participants based on years of service do not count toward this limit. (Note: Clergy housing, if applicable, is excluded from compensation for this calculation.) Participants can contact the General Board of Pension and Health Benefits for help determining how much they can contribute.

 

For more information, please refer to the IRS Press Release.


Mobile App

View your pension accounts through the General Board’s new mobile app. In addition to viewing account balances, you can also look at LifeStage investments and check current rates of return. To find out more information and get instructions on how to download the app click here.

 

CRSP/CPP CALCULATIONS

CRSP (Clergy Retirement Security Program) and CPP (Comprehensive Protection Plan) is calculated as a percentage of compensation. Read below to learn how the Kentucky Conference calculates the pension (CRSP) and disability/life insurance (CPP) amounts for 2016.

 

We start by calculating the Base Pension Compensation, which is the total salary plus any housing that is provided. The Base Pension Compensation is then used to calculate pension and insurance payments for the year.

Total Compensation plus Housing (parsonage equivalent or housing allowance) = Base Pension Compensation

 
 

Example 1:

Pastor A receives a total salary of $45,000 and is also provided a parsonage* by the church. What is Pastor A’s Base Pension Compensation?
 

$45,000 + $11,250 = $56,250.00 Base Pension Compensation

 

  

* For pastors who are provided a parsonage, we calculate the “parsonage equivalent” which is 25% of the total compensation. In Example 1, $45,000*25%=$11, 250.
 
2016 CRSP/CPP Calculations (Pastor A)

 

Benefit Type
Formula
Monthly Calculation
Total
CRSP DB*
(Base Pension Comp*10%)/12
($56,250.00*10%)/12
$468.75
CRSP DC
(Base Pension Comp*3%)/12
($56,250.00*3%)/12
$140.63
CPP
(Base Pension Comp*3.4%)12
($56,250.00*3.4%)/12
$159.38

 

*For CRSP DB, the General Board of Pension uses the lesser of the Base Pension Compensation or the DAC (Denominational Average Compensation). The DAC for 2016 is $67,333.00. Since $56,250 <$67,333.00., the Base Pension Compensation is used to calculate Pastor A's CRSP DB payment.

 

 

Example 2:

Pastor B receives a total salary of $58,000.00 and a housing allowance of $16,000.00. What is Pastor B’s Base Pension Compensation?

$58,000 + $16,000 = $74,000.00 Base Pension Compensation

 

  

Since Pastor B does not have a parsonage, the church-designated housing allowance is added to the compensation to calculate the Base Pension Compensation.
 
2016 CRSP/CPP Calculations (Pastor B)

 

Benefit Type
Formula
Monthly Calculation
Total
CRSP DB*
(Base Pension Comp*10%)/12
($67,333.00*10%)/12    
$561.11
CRSP DC
(Base Pension Comp*3%)/12
($74,000.00*3%)/12       
$185.00      
CPP
(Base Pension Comp*3.4%)12
($74,000.00*3.4%)/12   
$209.67 

 

* In this example, $74,000>$67,333, so the DAC is used to calculate CRSP DB.
 
Definitions
CRSP- Clergy Retirement Security Program
CRSP DB – the defined benefits portion of CRSP
CRSP DC – the defined contribution portion of CRSP
CPP – Comprehensive Protection Plan, i.e. disability and life insurance paid by the church for full-time clergy

 

Forms

UMPIP (United Methodist Personal Investment Plan)

UMPIP Contribution Election Form Elect your monthly contribution into your UMPIP account (to be completed by participant and plan sponsor/SPU)

UMPIP Enrollment – For first-time clergy and lay enrollees in UMPIP