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     Contributions

There are two basic types of contributions that may be made to the Planemployee contributions and employer contributions.

These contributions are made to the Plan on a regular basis. Your employer will automatically send all contributions (both yours and the employer’s) to the Plan for investment. There are limits on the total amount of contributions that may be made to the Pension Plan per IRS guidelines as published on the BBT website at www.cobbt.org.

Employee Contributions

There are two primary types of employee contributions that you can make to the Plan — Tax-Sheltered Contributions and Roth Contributions. Both types of contributions are voluntary contributions. You may choose how much you want to contribute, subject to an annual Internal Revenue Code limit on voluntary contributions.

— Tax-Sheltered Contributions

All eligible employees can make Tax-Sheltered Contributions to the Plan. This type of contribution allows you to contribute a certain portion or percent of your compensation to the Pension Plan on a pre-tax basis. Your taxable salary is reduced by the amount you contribute to the Plan, saving you current tax dollars. You pay taxes on these Tax-Sheltered Contributions and their earnings only when you withdraw them from the Plan.

To make or change Tax-Sheltered Contributions to the Pension Plan, logon to your account at brethrenpension.org or call us at 866-723-0001 and select your options. Your selections authorize your employer to reduce your salary by the amount of your Tax-Sheltered Contributions.

— Roth Contributions

All eligible employees can make Roth Contributions. These are contributions that you choose to make to the Pension Plan on an after-tax basis. Contributions are taxpaid, and you will not pay tax on the earnings (if held in the Plan for 5 years or more). You may choose how much you want to contribute. This type of contribution is also taken out of your salary but does not reduce your taxable income. To make Roth Contributions to the Pension Plan you must log on to your account at brethrenpension.org or call us 866-723-0001 and select your options. Your selections authorize your employer to withhold Roth Contributions from your salary.

You can amend your Tax-Sheltered or Roth Contributions at any time by logging in to your account at brethrenpension.org or calling us at 866-723-0001. Your employer will be notified of that change through a weekly electronic file.

Employer Contributions

In addition to the voluntary contributions that you personally make to the Plan, your employer may also make contributions on your behalf. There are two types of employer contributions that may be made to the Pension Plan — Basic Contributions and Matching Contributions. Your employer’s Plan adoption agreement describes the type and amount of contributions that your employer will make on your behalf. Employer contributions are always tax-deferred. You pay taxes on these accumulations only when you start to receive distributions from the Pension Plan.

— Basic Contributions

Your employer may elect to make Basic Contributions. This is a contribution your employer makes whether or not you make voluntary contributions to the Pension Plan. Normally, Basic Contributions are based on a percentage of your compensation. Check your employer’s Adoption Agreement to see if your employer makes employer Basic Contributions and, if so, how much those contributions will be.

— Matching Contributions

Your employer may also elect to make Matching Contributions on your behalf. Check your employer’s Adoption Agreement to see if your employer makes Matching Contributions and, if so, how much those contributions will be.

— Safe Harbor Contributions

Your employer may also elect to make Safe Harbor Contributions on your behalf. Check your employer’s Adoption Agreement to see if your employer makes Safe Harbor Contributions and, if so, how much those contributions will be.

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Rollover and Transfer Contributions

If you are a participant in another retirement plan, you may also be able to make a Rollover Contribution or a Transfer Contribution to this Plan.

— Rollover Contributions

If you have worked for another employer and have made contributions to that employer’s retirement plan, you may be able to roll some of your contributions from that retirement plan over to the Plan. There are two ways to make a Rollover Contribution to the Plan. The easiest and most cost-effective method is to arrange with the administrator of the other retirement plan to transfer your account balance directly to this Plan. That means that you do not receive the distribution, and income tax is not withheld at the time of the rollover. You can also make a Rollover Contribution to the Plan even if you did not arrange for the previous plan administrator to make a direct transfer to the Pension Plan. To do so, you must deposit the amount in the Plan within 60 days of receiving the distribution. For more information, see the Plan document.

Note: Rollover funds and their earnings are not eligible for annuitization but may be withdrawn through a Periodic Payment Plan arrangement, or via lump sum once eligibility requirements have been met.

— Transfer Contributions

A Transfer Contribution is a transfer directly from another 403(b) annuity provider to the Plan. The Plan accepts Transfer Contributions from any other 403(b) account. You should also check with the administrator of the other retirement plan to see if transfers out of that plan are allowed. There are a number of special rules and limitations on Rollover Contributions and Transfer Contributions. Therefore, if you are a participant in another retirement plan, have made retirement contributions to another 403(b) provider, or have made contributions to the Brethren Pension Plan through another eligible employer, contact us to determine if you can make a Rollover Contribution or Transfer Contribution to the Pension Plan.

How Much To Contribute

The tax laws limit the amount of contributions (not including Rollover or Transfer Contributions) that may be contributed on your behalf. Because these limits are determined by your own financial circumstance, BBT cannot be responsible for ensuring that you are compliant with contribution rules and regulations; that must be your responsibility. You should consult with your tax adviser about the legal contribution limits.

Basic Limits: There are essentially two limits on the amount of contributions that can be made to your Account. The first limit only applies to your voluntary Tax-Sheltered and Roth Contributions. The other limit applies to all contributions made to the Plan on your behalf — both your own voluntary contributions and employer contributions. You cannot exceed either of these limits.

— Limit on Tax-Sheltered and Roth Contributions

The first contribution limit is that the total amount of your voluntary Tax-Sheltered and Roth Contributions cannot exceed a specified dollar amount. The Internal Revenue Service publishes the limit each year and it is also posted on the BBT website at www.cobbt.org. This limit does not include employer contributions.

— Limit on Total Contributions

The second limitation on how much you can contribute is the total amount of your Tax-Sheltered, Roth, and employer contributions made in a calendar year. This amount cannot exceed 100 percent of your taxable compensation or the statutory dollar amount, whichever is less. The IRS publishes the limit each year and it is also available on the BBT website at www.cobbt.org.

 

Catch-Up Contribution Limits: There is a special “catch-up” contribution limit that applies in limited cases.

 

— Age 50 Catch-Up Contributions

Under the Age 50 Catch-Up Contribution limit, beginning in the year you turn 50, you can make additional voluntary Tax-Sheltered and Roth Contributions. The catch-up limit is set by the IRS each year. These additional voluntary Tax-Sheltered and Roth Contributions do not count for purposes of either of the two main contribution limits discussed above. That means that if you turn 50 in a certain year, you can make Tax-Sheltered and Roth Contributions up to the basic limit, plus an additional amount up to the Age 50 CatchUp Contribution limit.

To check the current contribution limits, you can view the Pension section of the Brethren Benefit Trust website, www.cobbt.org.

 
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Vesting

Vesting is another word for “ownership,” or your irrevocable right to obtain contributions made to the Plan on your behalf. All amounts in your employee subaccount are 100 percent vested and non-forfeitable. This includes any Tax-Sheltered Contributions, TaxPaid Contributions, Roth Contributions, Rollover Contributions, and Transfer Contributions.

Vesting of the employer contributions in your employer subaccount is determined by your employer. Refer to your employer’s Plan Adoption Agreement to find out when your employer contributions are vested.

Federal and State Income Tax Information

You do not pay federal income taxes on the contributions at the time you make Tax-Sheltered Contributions. You also do not pay federal income taxes at the time employer contributions are made. All taxes on these contributions are deferred until benefits are paid to you or your beneficiary. Tax-Paid Contributions and Roth Contributions are taken from salary on which you must pay federal income taxes at the time the salary is paid. These contributions are therefore not taxed when they are later distributed. However, the earnings on Tax-Sheltered and Tax-Paid contributions are subject to tax at the time of distribution. Roth Contributions and the earnings on those contributions are not taxed when they are later distributed if they have been held in the Plan for 5 years or more.

The way in which your Plan benefits will be taxed under most state and local income tax laws will be the way in which they are taxed for federal tax purposes. BBT is required to withhold taxes on payments made from the Plan according to Federal and State withholding rules in effect at the time of distribution. Please see the Withdrawals section of this handbook for additional information on income taxes. However, you should consult a tax adviser about taxation of your benefits under state and local tax laws, if you are subject to such taxes.

All contributions made on your behalf, along with earnings on those contributions, will be credited to an account under the Plan in your name. BBT will determine the fair market value of your account, allocating investment earnings and losses to that account. You will receive a quarterly statement of your account balance that reflects all contributions to your account made since the preceding statement, including Rollover and Transfer Contributions; all amounts paid to you from your account during that period, if any; and all earnings and losses to your account. To find out your account balance, refer to your quarterly statement, call us at 866-723-0001, or log in to your account online at www.brethrenpension.org.

Employee and Employer Subaccounts

Your account is divided into two different subaccounts: an employee subaccount for your personal contributions and an employer subaccount for employer contributions. There are some important differences in pay-out options between the two subaccounts, which are discussed in the section titled Receiving Your Retirement Benefit.

Employee subaccount

This subaccount includes:

• All of your employee contributions to the Plan, including any Tax-Sheltered Contributions, Tax-Paid Contributions, Roth Contributions, Rollover Contributions, and Transfer Contributions.

• Investment returns on all employee contributions.

Employer subaccount

This subaccount includes:

• All employer contributions made on your behalf, including any employer Basic, Matching, or Safe Harbor Contributions.

• Investment returns on all employer contributions.

Joining the Plan

Receiving your Retirement Benefit

Contributions

Withdrawals

Investments

Plan Facts

Other Plan Provisions

Glossary

Building financial security

Bettering the world

Together

Brethren Benefit Trust provides retirement benefits, health and welfare benefits, asset management, and financial advocacy to pastors, employees, and members of the greater Church of the Brethren community.

Since it began as the Pension Board in 1943, BBT has been called to serve its members and clients, and we are thankful for that opportunity.