Monday, November 26, 2018

Retirement Planning for Ministers and Churches – Part 2

Consider these statistics:
  • According to the CDC, life expectancy in the U.S. has climbed from 66 in 1940 to 79 in 2016. This means that, on average, Americans need to plan for many more years of retirement than in previous generations.
  • Northwestern Mutual’s 2018 Planning & Progress Study found that 21% of those surveyed have $0 retirement savings, 40% have less than $25K saved.
  • Michal Grinstein-Weiss / Washington University study found that 45% of those surveyed had no retirement savings; the median retirement account balance was $3K, and only $12K for households nearing retirement

Clearly, retirement planning is important, and for ministers, the church has a responsibility to care for ministers as their role changes. In the recent webinar, 8 Essentials of Retirement Planning for Ministers and Churches, and in an eBook by the same name, ECFA lays out the roles of both the church and the minister, best practices to do what is right before God and man, and important concepts for practical application.

This 2nd post in a 2 part series will highlight Essentials 5-8. (Click here to read Part 1 on Retirement Planning for Ministers and Churches.)

Essential 5: Encourage Contributions

It is important for churches to help staff to understand the realities of longevity, the necessity for savings, and the freedom to go and grow during the future. Churches are urged to make participation and retirement preparation an expectation of every minister and staff person. Some churches may choose to automatically enroll individuals, consider an auto escalation feature for employee contributions, and strongly encourage ministers and staff to take advantage of any matching by the church for “free” money. It is also important to advise staff members with ministerial status about special tax advantages.

Essential 6: Recognize the Uniqueness of Ministers

There are certain aspects of compensation and benefits that are different for ministers than for any other church staff members. Two special benefits for those with ministerial status are:
  • Nonelective and elective employer contributions are excludable from income and SECA tax
  • Minister’s housing exclusion can be applied to distributions from denomination or church-sponsored 403(b)(9)
Churches can honor their ministers by helping them maximize all the tax benefits offered by careful planning.

Essential 7: Consider Planning Insights and Key Issues

There are four planning insights that are beneficial to consider:
  1. Spousal income – leverage any spousal income by saving when possible, and participating in matching retirement plans
  2. Social Security – be aware that whichever spouse is eligible for social security benefits, the other spouse is automatically eligible for 50% of that amount or their earned amount, whichever is higher
  3. Bi-vocational income – participate in employer match plans, but make the church plan your primary saving vehicle
  4. Living trust - create a living trust to avoid probate court and allow you to direct how your estate will be handled

Essential 8: Continue Planning

For larger churches with ministers not already covered under a denominational plan, consider a Retirement Plan Oversight committee to expand the oversight to more than one person, provide fresh perspective, and expertise in various areas. It is also helpful to add a person with little retirement planning knowledge to represent a lay perspective.

To help ministers make timely decisions that ensure a comfortable retirement, check out this Countdown to Retirement, provided in ECFA’s Knowledge Center.

Monday, November 19, 2018

Retirement Planning for Ministers and Churches – Part 1

Planning for retirement is perplexing and complex to many. The goal is to provide a framework, a way of thinking about, and a way to successfully plan for retirement to show “double honor” to those who labor as ministers. When approaching the issue of retirement, there is an interdependence between the church and the minister. When they are both in tune, the resulting music will be beautiful. When they are not, the discord will be painfully evident.

In a recent webinar, 8 Essentials of Retirement Planning for Ministers and Churches, and in an eBook by the same name, ECFA lays out the roles of both the church and the minister, best practices to do what is right before God and man, and important concepts for practical application.

In this post, we’ll highlight the first four essentials from the webinar and eBook.

Essential 1:  Understand the Stages of Retirement

The stages of retirement can be broken down into three main categories. While the precise ages may vary from person to person, each of these stages is unique and packed with Kingdom-building opportunities.
  • Active Application (67-77) – slowing down a bit, but still productive in leadership, bringing energy and insight to any endeavor
  • Insightful Stewardship (78-87) – bringing wisdom and insight through mentorship; leadership roles are collaborative
  • Reflective Sharing (Ages 88+) – reflecting on what God has done, and sharing that with those in your sphere of influence

Essential 2: Help Staff and Ministers Understand the Need

It is important to guide your church and its leadership to develop a well thought out, financially sound, and tax conscious retirement plan for ministers and staff. Factors to consider include longevity (life expectancy), cost, and future service (what God will call each person to in the stages of their retirement). The two biggest expenses to plan for are healthcare and housing.

Essential 3: Assess the Church’s Role in Retirement
As stewards of God’s resources, churches have a measure of responsibility for the long-term well-being of our Christian brothers and sisters, ministers, and staff. Churches are encouraged to:
  • Provide tax-advantageous opportunities to save
  • Assist by making contributions to the plans available
  • Encourage participation and preparation for both ministers and staff

Essential 4: Select the Right Vendor

For ministers not already covered under a denominational plan, it is critical to work with a vendor that specializes in church retirement plans. It is key that the vendor understands how to utilize the housing allowance as it relates to contributions to the retirement plan, as well as offering values-based investments (funds that align with biblical values). It is also imperative to have access to an IRS approved plan document to ensure that the plan meets all IRS requirements.

Please watch this blog for Part 2 on this topic, which will cover Essentials 5-8 from the ECFA webinar and eBook 8 Essentials of Retirement Planning for Ministers and Churches.

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Monday, November 12, 2018

Top Takeaways from Our First Year Multisite – with Justin Steinhart

When it’s time for your church to start considering big decisions, whether launching a new ministry, expanding leadership, or going multisite, it is imperative that God take the lead. What does that look like in practice? Church administrators, this one’s for you.

Justin Steinhart, Pastor of Administration at Mill City Church, has been there for many changes, including the move to multisite. On a recent ECFA podcast, Justin shared with us a few takeaways for churches on the cusp of this decision.

  1. Going multisite will expose your weaknesses as a church. It will push staff, team, and leaders beyond their comfort zones, and will require more work and responsibility.
  2. Foster a pipeline of skilled and capable leaders. People must be continually trained and developed. Growth tracks and programs will help individuals in your ministry become talented, homegrown leaders ready to take the next step.
  3. Investigate your church culture. How would you define the culture of your church? Ask yourself: is this something that is being continually cultivated and producing fruit?

Administration is an essential component of Kingdom work, and we are thankful for each and every person who makes this work happen. You are valuable, you are seen, and we want to help support you with free resources! Check out ChurchEXCEL church administration resources, or pass the link along to a friend.

Monday, November 5, 2018

Smart Money for Church Salaries - With David Fletcher

Working in ministry presents a unique set of challenges, but fair and reasonable compensation is something we should all strive for in our churches. More than that, there is a legal and biblical mandate to get it right. To abbreviate, here are three top areas where churches can be smarter when it comes to salaries:

  1. Solid salary comparisons. It is beneficial to draw from a variety of local sources, beyond national comparisons of other churches. 
  2. Use a good, and legal, ministerial housing allowance form. Maximizing the benefit of the housing allowance, and knowing how to plan for it, can make a big difference in take-home pay. 
  3. Create a master spreadsheet for salaries. This should include every component (salary, benefits, etc.) of compensation for every staff member in the organization. 

In a series of workshops during 2018, David Fletcher of XPastor explores the topic of church salary with attendants from across the country. In his companion book, Smart Money for Church Salaries, David uses a compiled case study from church compensation team meetings to help pastors and staff navigate preparing, performing, and doing their best when it comes to salary.

For more detailed discussion, (including resources and sneak peeks) be sure to check out the full ECFA podcast with David Fletcher of XPastor.