Summary of Divorce Guide

Reformed Church in America Board of Benefits Services RCA Retirement Program and Divorce Issues SUMMARY OF DIVORCE GUIDE Divorces are infrequently harmonious events with issues to be resolved between the parties involved. Among many other issues, there frequently are matters concerning the division of assets, including those in retirement plans. This guide is written to provide general information concerning the nature of the RCA Retirement Program, our operations in this area and plan requirements. This is an informational guide and is not a legal document. The Plan Documents and legal structure covering the plans and your state’s divorce court decree or judgment will always supersede information contained here. The RCA maintains (2) two distinct retirement plans. In summary: 1. The Reformed Church Retirement Plan (“Retirement Plan”) is a non-qualified deferred compensation plan. This plan has been approved by a letter ruling from the IRS, is unique, and contains some provisions which are not typical of many qualified plans. 2. The RCA 403(b) program is generally consistent with the guidelines associated with qualified plans. There are similarities in the two plans: • Upon divorce, both plans refer to the “owner” of the benefits account as the “Participant” and to the ex-spouse as the “Alternate Payee.” • All accounts are owned by only one person, the Participant. Specific information concerning each account will only be shared and discussed with the Participant, unless and until the Participant provides the Board with written permission to share information with the Alternate Payee or his or her designee. • Both plans are subject and controlled by their own Plan Documents. • Both plans are under the jurisdiction of the Board of Benefits Services of the RCA. • Before a distribution will be made incident to a divorce, both plans require the approval of the plans, the Board, Fidelity Investments (which serves as custodian for both plans) and legal counsel. • To effect a transfer of funds under either plan, certain documentation is required, and there must be an agreement among all parties as to the distribution of the benefits in the account in order for a distribution to be made. Revised 8/08 • In all instances, payments to be transferred will first be transferred to a newly established plan account at Fidelity and then distributed as directed by the parties in their Qualified Domestic Relations Order (“QDRO”), Domestic Relations Order (“DRO”) or other written agreement, as applicable. As a result, in all instances the “Alternate Payee” will be required to submit a new account(s) application that establishes an account with Fidelity. Incidental Information Over several years there have been a number of changes in the structure of the RCA Retirement Program. In general, however, the majority of funds are held in the Retirement Plan as deferred compensation paid for by the Employer(s). These assets are owned by the Board, investment decisions are being directed by the Participant but subject to Board approval, and are to be paid to Participants subject to the rules and procedures of the Retirement Plan. Until December 31, 2004, the 403(b) Program held assets contributed directly by Participants. The vast majority of these contributions are pre-tax contributions although there are small amount of “after tax” contributions. Effective January 1, 2005, the 403(b) Program contains contributions paid by the employer and pre-tax contributions made by the Participant. Processing and Effecting Transfers The 403(b) Program Most attorneys and courts are familiar with distributions made from 403(b) plans. Under the 403(b) Plan, a clearly specified amount is transferred from the Participant to the newly established account of the Alternate Payee. This transfer is a non-taxable event. To process the transfer of funds from a Participant’s 403(b) plan account to an Alternate Payee, we require the following documentation: 1. A certified copy of the divorce decree or judgment. 2. A certified Qualified Domestic Relations Order (“QDRO”). 3. Completed and signed Fidelity Documentation confirming the transfer. (Assignment of Rights Form) 4. Completed new account documentation for the Alternate Payee. Retirement Plan Under the terms of the Retirement Plan, funds can be transferred to an Alternate Payee in only two ways. The Alternate Payee can request and receive a lump sum payment for the - 2- share-pensions\divorce\summary of divorce guide balance being transferred. This is a taxable transaction and will be reported as current income to the Alternate Payee in the current year. The alternative is for the Alternate Payee to maintain his or her benefit in the Retirement Plan. If this distribution is elected, the Alternate Payee’s share of the Participant’s account will be transferred to a newly-established Fidelity account as part of the Retirement Plan. That account will then be subject to the rules and regulations of the Retirement Plan. Funds transferred in this way can not be “rolled” to any other plan as a non taxable event. A clearly specified amount is transferred from the Participant to the newly established account of the Alternate Payee, a non taxable event. To process the transfer of funds from a Participant’s account in the Retirement Plan to an Alternate Payee, we require the following documentation: 1. A certified copy of the divorce decree of judgment. 2. A certified DRO ( Domestic Relations Order) or other written agreement notarized by the parties that conforms to the requirements of the plan. 3. Completed and signed Fidelity Documentation confirming the transfer. (Assignment of Rights Form) 4. Completed new account documentation for the alternate payee. Through years of experience we have it found it best for early notification to the Board of Benefits Services of a pending distribution. We cannot accept documentation, including a Divorce Decree, QDRO, DRO or other written agreement, which contains language contrary to our Plans. To eliminate unnecessary repeated court submissions, we urge all parties to present to the board drafts of a QDRO, DRO, and divorce language for review prior to submitting them to a court for approval. We have created a more detailed guide that summarizes the procedures parties must follow to obtain distribution of retirement benefits incident to divorce. We have also created a “model” QDRO (for the 403(b) Plan) and Agreement (for the Retirement Plan) to assist attorneys representing spouses of certain current or former employees of the RCA. Please contact us, or have your attorney contact us, to obtain a copy of the guide or model QDRO or Agreement, or both, or if you have any questions about the information explained in this guide. Retirement Plan Administrator Board of Benefits Services Reformed Church in America 475 Riverside Drive, 18th Floor New York, NY 10115 - 3- share-pensions\divorce\summary of divorce guide