Church of God Benefits Board Making a difference . . . One person at a time! July 2005 • Volume 7 • Issue 2 Church of God Benefits Board's Assets Exceed $200 Million A ssets of the Church of God "Our growth has averaged nearly members across the United States Benefits Board Inc. now $17 million a year over the past five and around the world through the exceed $200 million, the years," said Art Rhodes, president retirement services provided to mis- Board of Trustees announced and CEO of the Board. "Achieving sionaries and military chaplains. recently. this milestone makes the Benefits The retirement plan is available to Board a major participant in the ministers and other church-related "When the Benefits Board was cre- industry." employees in the Church of God. ated 11 years ago, none of us could have imagined reaching $100 mil- "While our assets are on the rise, our lion in assets, let alone $200 mil- commitment to providing personal lion," said Jerry Dixon, chairman of service to each of our participants the Board of Trustees. "God has will hold steady and strong," truly blessed us with phenomenal Rhodes said. "Our mission is to pro- growth over the last decade." vide the best pension plan possible for our ministers and church staff Dixon attributes the Board's dramat- The Church of God Benefits Board, members." ic growth in assets to the number of Inc., was created in 1994 as a sepa- In This Issue church-related employees joining rate, but affiliate, organization of the Church of God, Cleveland, Tenn. •Locking in a Church the plan, the contributions made to Loan the plan by the participants and their Formally known as the Ministers' •Put Retirement employer/church, and the Board's Retirement Plan, the 403(b) church Savings First investments. pension plan has more than 4,500 •Preventing Identity Theft Internal Revenue Service And More . . . Release Updated Publication for Ministers The Internal Revenue Service has released an updated version of Publication 517, entitled Social Security and Other Information for Members of the Clergy and Religious Workers. The publication can be accessed directly on the IRS's web site by going to http://www.irs.gov/pub/irs-pdf/p517.pdf. Publication 517 is a summary document from the Service which provides basic guidelines for ministers concerning Social Security coverage, exemption from self-employment tax, earned income tax credit and much more. The publica- tion even contains updated information on ministers contributing to retirement plans, such as the Ministers' Retirement Plan. Most importantly, Publication 517 contains examples of completed tax forms, ranging from W-2s to a minister's Form 1040. Ministers should find the updated publication to be most helpful. "Locking" in a Church Loan S hort-term interest rates have risen eight times in the past While no one can predict how long the current conundrum ans 10 months, bringing the prime interest rate up from 4% will exist, there is no better time than now to look at getting to 6%. In turn, adjustable rate mortgages for both residential out of your adjustable rate mortgage and locking in a fixed and commercial loans have increased as well. Interestingly rate product. The Benefits Board will be happy to talk with enough, long-term rates have not increased in a correspon- you about your church mortgage needs. We offer both ding fashion. Fed Chairman Alan Greenspan calls such a adjustable rate mortgages and fixed rate mortgages. To "conundrum," i.e. a difficult and complicated problem. obtain more information about our church loan program, you may visit our web site or contact Mr. J.T. Jones in the This conundrum is allowing an opportunity for churches Board's office at 423-478-7131 or 877-478-7190 toll-free. (and individuals) that currently are in adjustable rate mort- Lo gages to move to fixed rate mortgages with little additional costs. The difference, or "spread," between most adjustable rate mortgages and the current fixed rates has narrowed so that paying the slight difference for the fixed rate mortgage is nothing more than locking in a good insurance policy. Home Buyers Using Adjustable Rate Mortgages I n the past year or so, mortgage rates have gradually inched up as the Federal Reserve raised short-term matter of fact, the number of con- sumers seeking adjustable rate mort- gages (or ARMs) at the end of March ing costs of the adjustable rate mort- gages. In addition, if those consumers divert money from their other spending interest rate. While mortgage rates are 2005 was the highest since records on to pay the mortgage, then the whole not directly tied to the actions of the such were started in 1990. Some 36.6% economy could suffer. Fed, indirectly the Fed's increases have of mortgages, including refinancings put pressure on mortgage rates. Such and new purchases, had adjustable rate If you are only going to be in your has led to fixed-rate, 30-year mort- mortgages. That amount is up more home for a short period of time, an gages that are priced around 6.0%. than 9 percentage points over the same adjustable rate mortgage is probably a time period a year earlier. wonderful financing tool. However, if The increase in the rate on fixed-rate you plan to stay in the home for 5-7 mortgages With the average rate on a one-year, years, or more, a fixed-rate mortgage has caused adjustable rate mortgage at 4.39%, (preferably on a 15-year term) is gener- many con- most consumers choosing ARMs are ally the best alternative. Even at 6%, sumers to doing so primarily to keep their house historically such is a good rate for a flock to payments low. Many economists, how- fixed-rate mortgage. So evaluate your adjustable ever, are concerned that as rates contin- adjustable rate mortgage. It may be rate mort- ue to rise these homeowners may find time to convert to a fixed rate before gages. As a it more difficult to keep up with the ris- interest rates go higher. Board of Trustees Officers & Staff Jerry Dixon, Chairman President/CEO Arthur D. Rhodes Newsletter B. J. Moffett, Vice Chairman Tim Hill Executive Vice President J. T. Jones Senior Editor Arthur D. Rhodes Dudley Pyeatt Corporate Secretary Gayla Iles Dennis Watkins Director of Member Services Donna Hendren Editor & Design Denise Chaney Herbert Buie Executive Assistant Lynn Golden Gerald McGinnis Receptionist/Benefits Specialist Ruth Brown Bill Sheeks IRS Requires Contributions to be Timely Sent N ew regulations from the Internal Revenue secretary of this requirement. It is very probable that Perspectives Service now require that withholdings by the by the end of the year the IRS will prohibit us from employer/church must be remitted to the retirement accepting contributions that are not sent to the plan within at least 15 days from the end of the month Benefits Board within a "reasonable time" - in other in which they were withheld. For example, contribu- words, within 15 days from the end of the month in tions withheld from the participant's salary during which they were withheld. January must be sent to the Benefits Board by no later than February 15. Also, you should remember that it is to your advan- tage to get the money into your account as quickly as If you are not responsible for sending in your contri- possible so that it can begin to accumulate earnings to butions, you should advise your church treasurer or build up your retirement for the future. IRS Web Site for Retirees The Internal Revenue Service has recently devoted a full web site to information of special concern to retirees. The web page can be accessed at www.irs.gov/individu- als/retirees/index.html. The web site contains multiple links to IRS documents that provide advice and counsel to retirees and seniors in general. There is even a fre- quently asked question list that provides quick and simple responses to many of your common concerns. Check out the IRS site. We think that you will find it helpful as you plan for retire- ment and as you go through retirement. 2004 Audit is Complete A t the spring meeting of the Board of Trustees, the Benefits Board's out- side auditing firm, Henderson, 2004, church loans made up less than 30% of the assets of the Board while at the end of 2002, for example, church The audit pointed out that our cost of administering the plan in 2004 was only $616,002 - less than 1/3 of one percent. Hutcherson, & McCullough, presented loans accounted for more than 41% of Most internal costs of pension plans run the Trustees with the completed audit for the total assets. from 0.50% to 1.5% of total assets. We calendar year 2004. The audit confirmed are pleased that our costs were 0.31% - that the Board continues to grow at an In 2004, the Board had investment down from 0.32% in 2003. Those costs unprecedented level. income of over $12 million, compared to pay salaries, expenses, record-keeping $11.5 million in 2003. However, partici- costs, etc. As of December 31, 2004, the assets of pant contributions were slightly off in the Board stood at $199,268,513 - an 2004 at $13.15 million, compared to A complete copy of the audited financial increase of more than $16.8 million over $13.3 million in 2003. Distributions to statement is available upon request. the year before. The audit also showed participants were also up in 2004 at $7.8 Please contact the corporate office of the that the plan's assets are much more million compared to distributions of $7.7 Board with your request. diversified than in previous years. In million in 2003. Church of God Benefits Board, Inc. Post Office Box 4608 Cleveland, TN 37320-4608 (423) 478-7131 • (423) 478-7889 (fax) (877) 478-7190 (toll-free) www.benefitsboard.com retirement, you have lost the benefit of time - and the power of time in compounding your returns Making a difference . . . One person at a time! within your retirement account. Small contribu- tions early on go further than larger contributions Put Retirement Savings First made closer to retirement age. • Saving for retirement may actually even W hen asked why they are not saving more for retirement, many individuals respond that they are either using their "excess" money to put into a college fund for their children or they are using improve your children's chances of getting finan- cial aid to go to college. Pre-tax salary reduction contributions to a 403(b) retirement plan, such as those funds directly to pay college expenses for their children. The the Ministers' Retirement Plan, actually reduce question then arises as to whether parents should be saving for their your reportable income. In addition, the federal retirement or saving for their kids' college education. financial aid formula doesn't include money While parenthood is about sacrifices, the experts agree that there is invested in retirement accounts when calculating one thing you shouldn't sacrifice for the kids: your retirement securi- how much your family can afford to pay for col- ty. While it may sound heartless, your retirement savings should lege. come before your children's college fund. Financial planners list a So while you should strive to have a college fund for your couple reasons for this: children, you should not set up such • While your child can borrow money to pay for college, you an account to the exclusion of giving can not borrow to pay for retirement. If possible, we would to your retirement account. If you do, prefer that our children never have to borrow money for col- your college-educated children could lege. However, they will have an income stream to pay the end up having to support you later money back if they do have to borrow money. On the other in life when they have their own hand, a retiree has no such income stream. family obligations. • Catching up on retirement savings is harder than you think. If you wait until the kids are out of college to start saving for Tax Treatment of Fringe Benefits F ringe benefits are an important part of a minister's com- pensation package. In the church environment we like to talk about fringe benefits because we automatically associate become taxable to the minister or church-related employee. A summary discussion about fringe benefits can be found in the such with benefits that are not taxable. However, the IRS would Minister's Compensation Manual and the Church Treasurer's prefer that you take a different approach - all fringe benefits are Manual, available without cost on our web site at www.bene- taxable unless tax law specifically provides an exclusion or deferral. fitsboard.com. There are many different benefits that can be defined as "fringe In addition, the Internal Revenue Service has just issued an benefits" to an employee. In the church world, the most com- exhaustive guide on fringe benefits that can be accessed direct- mon fringe benefits are medical insurance and retirement plan ly by going to http://www.irs.gov/pub/irs- contributions. If properly approved by the church, documented, tege/fringe_bnft_flsg.pdf or by going to the Forms section of and/or substantiated by receipts, both can be non-taxable bene- fits to ministers and church employees. Without proper docu- the Benefits Board's web site. This guide is must reading for mentation and substantiation, even funds for these benefits can ministers and church treasurers. Making a difference . . . One person at a time! Giving to Churches Decline T he Barna Group recently released survey results showing that during 2004, nearly four out of every five adults donated money to one or more non-profit organizations. The highest percentage of tithers, only 23% of evangelicals acknowledged tithing on a regular basis. results show that 65% donated at least some money to a church It seems as though tithing has given way to tipping - and or other place of worship. The average amount donated to a Christians are proving to be very poor tippers. church was $895 per donor. The Barna survey pointed out several reasons why people do While the dollar amount sounds impressive, the Barna Group not give to their local church including those who lack motiva- noted that, factoring in inflation, giving to churches has actual- tion to give, those who do not see a sufficient return on their ly decreased by 2% since 1999. investment, those who are unaware of the needs of the church, those who are ignorant of the Bible's teachings on tithing and When considering the practice of "tithing", defined as donating giving, and those that are just purely selfish. at least ten percent of one's income to the church, the Barna Group found that only 4% of Americans gave such an amount To learn more about this amazing survey, you can visit the to churches. While evangelicals were the largest givers and the Barna Group on line at www.barna.org. Direct Contributions by Chaplains and Evangelists C haplains and evangelists are the only participants in the Ministers' Retirement Plan who can make direct contribu- tions by personal checks to their retirement accounts. All oth- On the other hand, Publication 571 notes that chaplains should take a deduction for their contributions by writing "403(b)" on the dotted line next to line 35 and deducting their contributions ers must make their contributions by salary reduction or by on that line. employer contributions by the way of an employer (or church) check. Since our plan is a before-tax, income retirement sav- Both provisions allow the evangelists and the chaplains to ings account, in other words a 403(b) account, all contributions deduct their contributions from regular income just as though must be made by the employer before the money is taxable to they were in an employment situation as a pastor or staff mem- the participant. We are currently prohibited from taking "after- ber of a church tax" contributions, such as could be made to a Roth-type indi- and such was vidual retirement account. Again, the only exception is for deducted off their chaplains and evangelists. W-2 Box 1 income. IRS Publication 571 goes into great detail on this subject. For Please remember evangelists (the IRS calls evangelists "self-employed minis- that these special ters") Publication 571 states that you must report your total rules only apply contributions to your 403(b) plan as a deduction on your tax to evangelists or return by deducting them on line 32 of Form 1040. chaplains. Making a difference . . . One person at a time! Preventing Identity Theft I dentity theft is a hot topic in the news today. Crooks are tional scams or offers that sound too good to be true. becoming more and more creative in how they steal your personal information and what they do with it. Instead of You should also be aware that "contesting" the charges made to moving to a deserted island, here are a few basic ideas to keep your credit card may not be enough. For example, if you contest in mind to help avoid becoming a victim of identity theft. a charge made to an American Express card, they only have to show that the charge was actually made to that card - and then you are responsible for the charge. If you know without a doubt • Never give your personal information to someone you that you (or someone you authorized) did not make the charge, don't know, especially when the request comes out of then you should contest the charge and report that the charge has the blue by e-mail or telephone. Just don't respond. been fraudulently made without your permission. For American • Shred your personal information, including receipts, Express and many card companies, contesting a charge is noth- monthly statements, bills, and pay stubs. Don't make it ing more than a request to verify the transaction. However, the easy for someone sifting through your trash to find allegation of fraudulent use of the information on you. card moves the review and investiga- • Monitor your credit report to catch fraudulent activity tion of the charge to a criminal level. as soon as it happens. • Review and reconcile your statements from banks and Your credit history depends on you credit card companies every month. This will allow you protecting your identity from crimi- to catch any suspicious transactions sooner. nals who seek to use your identify for • Finally, remember the old adage - "if it sounds too nefarious purposes. Take care to pro- good to be true, it probably is." So beware of promo- tect your identity today. Thinking the Unthinkable T he Financial Planning Association makes available a publi- cation that everyone should read. The publication, entitled "Thinking the Unthinkable: What Everyone Needs to Know about recommends that you write a detailed letter telling your survivors how you want your affairs handled. Funeral arrangements, where to find important documents, people to contact, and even your Estate Planning," is an excellent resource for planning for the own obituary could be included in this letter. While it may not future. The pamphlet provides detailed information on crafting a have the legal affect of your will, it will provide specific direction will, a durable power of attorney, a living will, and a medical to your family as to how you want your final wishes carried out. durable power of attorney. There is further discussion about insur- ance and trusts. The pamphlet, "Thinking the Unthinkable: What Everyone Needs to Know about Estate Planning," can be downloaded from the This pamphlet also makes a suggestion that is extremely impor- Financial Planning Association's at tant, but often not included in estate planning - write a letter to http://www.fpanet.org/public/tools/estate_planning.cfm. Taking your family. In addition to the legal documents of a will and ten minutes to read the pamphlet will benefit you immensely in durable powers of attorney, the Financial Planning Association your estate planning. Making a difference . . . One person at a time! F UNDS Large Capitalization Stock Fund • Manager v. Russell 1000 Small Capitalization Stock Fund • Manager v. Russell 2000 Index Past Performance Does Not Guarantee Future Results. Past Performance Does Not Guarantee Future Results. From December 2001 to present is the actual performance of the Church of God Benefits Board, Inc. From December 2001 to present is the actual performance of the Church of God Benefits Board, Inc. From November 2001 to inception represents a composite of multiple accounts not related to the From June 2000 to inception represents a composite of multiple accounts not related to the Church of Church of God Benefits Board, Inc. The Large Cap Stock portfolio’s inception is January 1981. 1, 3, 5, God Benefits Board, Inc. Small Cap Manager Inception is December 1992. 1, 3, 5, and 10-year per- 10, and 15-year performance is ending March 2005. formance is ending March 2005. International Stock Portfolio • Manager v. MSCI EAFE Growth Church of God Benefits Board, Inc. • Trustees’ Fund Past Performance Does Not Guarantee Future Results. From December 2001 to present is the actual performance of the Church of God Benefits Board, Inc. From August 2000 to inception represents a composite of multiple accounts not related to the Church of God Benefits Board, Inc. International Manager Composite Inception December 1991. 1, 3, 5, and 10-year performance is ending March 2005. Making a difference . . . One person at a time! 169 www.benefitsboard.com Permit No. Toll-free: (877)478-7190 CLEVELAND, TN Phone: (423) 478-7131 PAID Cleveland, TN 37320-4608 U.S. POSTAGE Post Office Box 4608 Organization Church of God Benefits Board, Inc. Non-Profit Does God Care About Your Finances? I n his wonderful book, The Blessed Life, author Robert Morris points out that God is financial well-being through a retirement pro- gram. As off-shoots of that mission, we have Art’s Remarks clearly concerned about your finances. He notes developed both church and member loan pro- that there are 500 verses in the Bible concerning grams, as well as educational materials and pre- prayer and nearly 500 verses concerning faith. sentations on building a complete financial com- However, there are more than 2,000 verses on pensation package. We believe that God greatly the subject of money and possessions. In addi- cares about your financial well-being and we tion, Jesus used parables 38 different times in want to be of service to assist you in taking care the scriptures to convey his point; 16 of those of your financial needs both now and in the parables dealt with money. future. It is critical that everyone understands money When statistics like those above are used where and how to handle it from a biblical perspective. there are 500 or so scriptures on prayer and over To quote directly from The Blessed Life, "How 2,000 on money, the question is often asked if Arthur D. Rhodes you handle money reveals volumes about your God cares four times more about our finances President and CEO priorities, loyalties and affections. In fact, it than he does our prayer life. That certainly does directly dictates many of the blessings you will not seem to be the case. God simply knew that (or won't) experience in life." we were going to need a lot more guidance on dealing with money issues than we might need A local bank advertises that they are "everything in developing our prayer life. However, our financial." While the Benefits Board is not quite money dealings and our prayer life should not be "everything financial," our main ministry mis- mutually exclusive. Maybe if we did more pray- sion is to assist ministers and church-related ing about our financial dealings we might have employees in providing for their long-term less money problems. Just a thought!!
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