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     Receiving Your Retirement Benefit

Annuity Option — A Monthly Payment for Life

If your employer has elected the annuity option, you are entitled to an annuity benefit from the Plan when you retire or separate from service after attaining age 59 1/2. If you have not terminated employment, you may start your annuity any time after the age 65.

An annuity benefit is a monthly payment for the rest of your life. If you are married at the time your annuity benefit begins to be paid, you will have choices to make about the level of monthly payment you select based on how much of the annuity benefit will also be extended to your spouse for the rest of his or her life. If you choose a single life annuity, the monthly annuity payment will cease upon your death. Once you start your annuity payment, you cannot change it. However, Brethren Benefit Trust may readjust annuities in the extreme situation where such changes are deemed necessary to protect and preserve the solvency of the Plan.

As discussed earlier, your employer and employee contributions are accounted for separately in different subaccounts. This is because upon retirement the employer and employee subaccounts are subject to different distribution rules.

Periodic Payment Option — A Payment with Flexibility

Instead of an annuity benefit, you are entitled to receive a periodic payment benefit from the Plan when you retire or separate from service after attaining age 59 1/2 for vested employer money, or at any age for employee money.

A periodic payment benefit is a flexible payment amount based on the period-certain or payment-certain amount you select.

Note: The periodic payment benefit will stop when your account balance has been depleted.

The periodic payment benefit amount can change based on market fluctuation and other changes that occur in your active account.

As discussed earlier, your employer and employee contributions are accounted for separately in different subaccounts. This is because upon retirement the employer and employee subaccounts are subject to different distribution rules.

If you select the periodic payment option, you or your beneficiaries will receive the full amount in your personal and employer accounts.

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Note: Annuity option is only available if your employer has elected this option.

Employer Subaccount

The money in your employer subaccount must be used to fund an annuity or a periodic payment plan. It cannot be taken in a lump sum distribution (which is permitted with your employee subaccount).

You may request an annuity on all or a portion of your employer subaccount:

• You will receive your employer subaccount (and possibly more) if your life expectancy meets or exceeds actuarial projections.

• You will receive less than the entire amount in the employer subaccount if you do not live as long as projected and have not chosen a surviving spouse option. The balance will remain in the Pension Plan to help fund the annuities for participants who live longer than projected. In this way, the Pension Plan works for the mutual benefit of all participants.

You may request a periodic payment plan on all or a portion of your employer subaccount:

• You may choose a monthly, quarterly, semi-annual, or annual installment distribution over a minimum of 10 years.

• If you pass away prior to exhausting the funds in your account, then the remaining balance is given to the beneficiary.

• Once your employer account balance is depleted, that source of retirement income will stop.

Employee Subaccount

Your employee subaccount is different from your employer subaccount, because you are not required to annuitize or use a periodic payment plan for the funds in this subaccount. You are guaranteed to receive the entire amount in this subaccount. This is your assured return.

• Annuitize your entire employee subaccount

If you choose this option, the funds in your employee subaccount will be combined with your employer subaccount to create a larger monthly payment. When your annuity begins, the assured return is paid first. Your employer subaccount must be annuitized in order for you to annuitize any portion of your employee subaccount. Note: Rollover funds and their earnings are not eligible for annuitization.

• Annuitize a portion of your employee subaccount

You may annuitize a portion of your employee subaccount and it will be combined with the employer subaccount to create a combined monthly annuity amount. Any remaining balance in your employee subaccount, following annuitization, may be distributed to you as a lump sum, rolled into an IRA or left invested in your subaccount for later action.

• If you decide to annuitize a portion of your employee subaccount, this annuitized amount is no longer available for a lump-sum withdrawal.

• Receive a lump sum distribution of your entire employee subaccount

• Receive all or a portion of your employee subaccount as a periodic payment in monthly, quarterly, semiannual, or annual payments with no minimum distribution period.

• You may leave your employee subaccount in the Pension Plan, where it will remain fully invested in whatever funds you designate.

Note: Annuity option is only available if your employer has elected this option.

What Happens When Your Annuity Starts

At the time your annuity starts, your employer subaccount will be transferred from the Pension Plan’s Active Lives Account to the Retirement Benefits Fund to fund your monthly annuity. If you decide to annuitize any portion of your employee subaccount, as described above, that portion of your employee subaccount will also be transferred to the Retirement Benefits Fund to increase your monthly annuity. The monthly annuity to which you are entitled will be based on the amount transferred to the Retirement Benefits Fund at the time your monthly pension commences. Your age and your spouse’s age at the time of retirement and actuarial assumptions currently in effect will also affect the amount of the annuity you will receive.

Important: Please note that monthly annuity payment amounts are not guaranteed. While the annuity is designed to provide a series of level payments over the lifetime of an annuitant (or surviving spouse, if applicable), the monthly payment amount can change if deemed necessary by Brethren Benefit Trust to protect and preserve the solvency of the Plan.

Once you begin to receive an annuity, managing these funds is no longer your responsibility. BBT is responsible for managing the Retirement Benefits Fund. You will continue to be responsible for managing any remaining balance in your employee subaccount — including investment allocations.

What Happens When Your Periodic Payment Starts

Your employer and employee subaccounts will remain in the Pension Plan’s Active Lives Account. Your periodic payments will begin according to your desired selections for your employer and employee subaccounts. For example, you may choose to receive 100 percent (or a portion thereof) of your employer subaccount over a 10 year period (or more). You may choose to receive 100 percent (or a portion thereof) of your employee subaccount over any number of years in monthly, quarterly, semi-annual, or annual installments (period-certain). You may instead choose to receive your payment as a specific dollar amount (amount-certain). Your account remains invested and will be impacted by market fluctuations. Your payment is calculated for each period (monthly, quarterly, semi-annually, annually) based on the factors you have selected and the impact of any additional contributions and market performance.

You may stop your periodic payments at any time. You may re-start your periodic payments by completing a new request.

When You May Start Your Annuity or Periodic Payments

If you terminate employment, you may start your annuity or periodic payments when you reach age 59 1/2 or later.

If you have not terminated employment, you may start your annuity at age 65.

You must begin to receive your annuity or periodic payments no later than April 1 following either the year in which you turn 72 or the year you retire from service with your employer, whichever is later.

Selecting Your Annuity

If you are married* when you start to receive annuity benefits, you may select one of three surviving spouse options described below. However, if your spouse consents, you may elect a single life annuity. Each of these forms of benefit will have a different payment amount. The amount of your monthly payment will be highest if you select a single life annuity and lowest if you select a 100-percent spouse option. Remember to select the annuity option carefully. You cannot change the form of annuity once your annuity payments begin. 

If you are not married when your annuity starts, your Plan benefit will be paid in a single life annuity, which means —

• Payments will be made to you in monthly amounts.

• Payments to you will stop upon your death and any remaining assured return will be paid to your beneficiary in a lump sum.

? To establish marital status, you will be required to provide legal documentation proving that status, i.e., a marriage license.

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Surviving spouse options for annuity option only

If you select a surviving spouse option, the monthly annuity payment you receive under each of these options will be somewhat lower than for a single life annuity. The annuity benefit applies only to the spouse to whom you are married when your annuity begins; there is no provision for transferring or changing the surviving spouse option once your account has been converted to annuity benefit payments.

The following surviving spouse options are available —

— 50-percent spouse option

Under this option, if you die before your spouse, your spouse will begin receiving a monthly payment equal to 50 percent of the amount you were receiving. If your spouse dies first, you continue to receive a payment for the same amount you were receiving prior to the death of your spouse.

— 75-percent spouse option

Under this option, if you die before your spouse, your spouse will begin receiving a monthly payment equal to 75 percent of the amount you were receiving. If your spouse dies first, you continue to receive a payment for the same amount you were receiving prior to the death of your spouse.

— 100-percent spouse option

Under this option, if you die before your spouse, your spouse will begin receiving a monthly payment equal to the amount you were receiving. If your spouse dies first, you continue to receive a payment for the same amount you were receiving prior to the death of your spouse.

The amount of your annuity

When you are ready to receive your benefit, the amount of your annuity is determined by the annuity option you have selected. It is calculated by adding the amount of money in your employer subaccount to that portion of your employee subaccount that you have decided to annuitize. This sum is then multiplied by an assumed earnings factor and then divided by your life expectancy. Life expectancies are determined by the Pension Plan’s actuaries.

If you are married, the amount of the payment will also reflect the life expectancy of your spouse, unless you choose the single life annuity option.

Each of these forms of benefit has a different payment amount. You should consider each annuity option carefully.

Remember: You cannot change your form of benefit once your annuity payments begin.

If you choose a partial lump-sum payment from your employee subaccount, any or all of your remaining employee subaccount may be added to your employer subaccount to increase the amount of your monthly payment.

Note: Rollover funds and their earnings are not eligible for annuitization.

The annuity benefit is intended to provide level payments for the entire life of the participant. Any decision to recalculate benefits is made within the context of the long-term viability of the Pension Plan for all current and future annuitants. The Plan will notify participants in advance when circumstances warrant the recalculation of annuity payments. Ultimately, it is possible for the payment amount to decrease depending upon market conditions.

The amount of your periodic payment

When you are ready to receive your benefit, the amount of your periodic payment is determined by the parameters you have selected. It is calculated by adding the amount of money in your employer subaccount to that portion of your employee subaccount that you have decided to include in the periodic payment. This sum is then multiplied by your chosen rate of return estimate and then divided by the period or payment chosen.

Note: Specific parameters apply to employer and employee funds. Contact us for more details or log on to your account at www.brethrenpension.org to download the most recent form that outlines your options.

You may also contact us to request a periodic payment quote. The quote can be generated for several scenarios so that you can make an informed decision on this benefit payment option.

If you choose a partial lump-sum payment from your employee subaccount, any or all of your remaining employee subaccount may be added to your employer subaccount to increase the amount of your periodic payment.

Surviving spouse options for periodic payment option only

Your surviving spouse will have the option to continue the periodic payments in force at the time of your death until the entire account balance is exhausted. Your surviving spouse also has the option to stop the periodic payments, consider withdrawal options, or establish a new periodic payment plan.

Lump-Sum Payments

As described above in the section titled Employee Subaccount, you may choose a lump-sum payment from your employee subaccount. If you do so, you have two choices. You can —

• Roll over the money into another eligible retirement plan. See the section titled Direct Rollovers and Mandatory Withholding for a more detailed discussion of rollovers.

• Receive a lump-sum distribution from the Pension Plan.

If you receive a lump-sum distribution and do not arrange to roll this distribution over directly to another eligible plan, the Pension Plan is required to withhold 20 percent of the taxable portion of this distribution and submit the withholding to the IRS. This will be reported to you and the IRS on Form 1099-R. This amount is reimbursable to you if you show the IRS that you deposited these funds in another eligible plan within 60 days of receiving the distribution. If your age is less than 59½, your distribution may also be subject to a 10 percent penalty tax.

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Returning to Work After Your Annuity Starts

If you begin to receive annuity benefits following termination of employment, no further contributions will be made to the Plan unless you return to work with an employer that participates in the Plan. If that happens, you may continue to receive your annuity payments and make contributions to the Pension Plan at the same time. The new contributions will go into a supplemental subaccount in your name, which you may annuitize or withdraw at a later date. When you choose to annuitize contributions in your supplemental subaccount, the benefit will be calculated based on your current age and the Plan’s current assumed earnings factor and paid separately from your existing annuity.

Receiving Your Retirement Benefit While Continuing to Work

At age 59 1/2 you may receive periodic payments or at age 65 you may annuitize your employer and/or employee account. Contributions may continue to be made to the Pension Plan at the same time. The new contributions will go into a supplemental subaccount in your name. When you choose to annuitize contributions in your supplemental subaccount, the benefit will be calculated based on your current age and the Pension Plan’s current assumed earnings factor and paid in a separate annuity payment. Remember that your employer contributions must be distributed through a minimum 10-year periodic payment plan or annuitized; amounts in your employee contributions are available for an alternative distribution.

Annuity Payment of Less Than $20

If your monthly annuity is less than $20, you may receive a settlement in cash in lieu of monthly payments at the discretion of the Plan administrator.

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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.