Defined Contribution



Glossary of Employee Benefit TermsAfter-tax contributions – Contributions for benefits which are deducted from your pay after any taxes are withheld. These contributions will affect the taxable wages as shown on your W-2.Annual out-of-pocket (OOP) maximum – The highest amount you have to pay for covered medical expenses in any single calendar year.? Once you’ve reached this amount, the plan generally pays 100% of eligible expenses for the remainder of the year.Before-tax contributions – Contributions for benefits which are deducted from your pay before any taxes are withheld. These contributions will affect the taxable wages as shown on your W-2.Beneficiary – The person(s) you name to receive certain benefits (such as life insurance) upon your death.Cash Housing Allowance (Housing Allowance) – Additional cash compensation paid to clergy in lieu of living in a parsonage.Clergy Retirement Security Program (CRSP) – A retirement program available to eligible clergy of The United Methodist Church since January 1, 2007 and revised beginning January 1, 2014. The plan is designed to be a portion of participants’ overall retirement portfolio. CRSP consists of both a defined benefit and defined contribution prehensive Protection Plan (CPP) – The Comprehensive Protection Plan (CPP) provides death benefits, long-term disability income replacement and certain other survivor benefits for eligible clergy of The United Methodist Church (UMC) and their families.Conference Average Compensation (CAC) – Average total compensation of United Methodist clergy serving in full-time appointments across a conference.Deductible – The amount of medical or dental expenses you must pay each year before your plan begins paying benefits. ?For example, if your first claim of the year is $1,000, and your deductible is $500, you will pay $500, then the plan will share the remaining $500 with you, according to the provisions of your plan.Defined Benefit (DB) – A retirement plan that pays participants a lump-sum amount that has been calculated using formulas that can include age, earnings and length of service.Defined Contribution (DC) – A pension plan that clearly defines the amount of contributions, which is usually a percentage of an employee’s salary. The benefits payable at retirement depend on several factors including future investment return and annuity rate at retirement.Denominational Average Compensation (DAC) – Average total compensation of United Methodist clergy serving in full-time appointments across the denomination.Explanation of Benefits (EOB) – The document you receive from the insurance company after your claim is filed and processed.? The EOB shows how much of the expense the plan covered and how much you may be expected to pay. ?If part or all of the expense is not covered, the EOB should explain why.Flexible Spending Account (FSA) – A special before-tax account that lets you pay for certain qualified expenses tax-free.? There are three types of flexible spending accounts:? the Dependent Care FSA, which lets you pay for expenses incurred in caring for your eligible dependents while you work; the Regular Medical FSA for those participating in an HRA, which you can use for health care costs (medical, dental, and vision) not covered under your plan; and the Limited Purpose FSA for those participating in an HSA, which you can use for eligible dental and vision costs not covered under your plan.? It’s important to note that the FSAs have a “use it or lose it” rule:? Any money remaining in your account at year-end (December 31, for the Dependent Care account; March 15 of the following year, for the Health Care FSA) will be forfeited.Health Reimbursement Account (HRA) – An account, funded only with employer contributions, that an employee can use to help pay for medical expenses not covered by the health care plan, such as deductibles and coinsurance.? HRA payments for eligible health expenses are tax-free to the employee.? At year-end, any money remaining in the account simply rolls over to the next (there’s no “use it or lose it” provision).? Although an HRA is often provided in conjunction with a high-deductible health plan, it is not required to be linked to such a plan.Health Savings Account (HSA) – A special savings account, linked to a high-deductible health plan.? Your employer may contribute to the account and you may also contribute before-tax dollars to your account, using the monies to pay eligible health care expenses tax-free.? Any money left in your HSA at year-end simply rolls over into the next.? So, you can use your account to pay current health expenses – or save to meet potentially higher medical costs at retirement.High-Deductible Health Plan (HDHP) – A plan with a high annual deductible (generally, an amount above $1,000 for individual coverage and $2,000 for family) that you must meet before any benefits are paid.Housing Allowance Exclusion (Housing Exclusion) – An amount of money designated by the clergy and approved by a resolution of the local church that can be excluded from taxes per IRS Code. The housing exclusion is excludable from gross income for income tax purposes but not for self-employment tax purposes. Ministerial Pension Plan (MPP) – A retirement plan that provides retirement benefits to eligible United Methodist Church clergy with service from 1982 through 2006. The plan is designed to provide participants with one element of their overall retirement portfolio. MPP was closed to new enrollments and no contributions were made after December 31, 2006. MPP was replaced by the Clergy Retirement Security Program (CRSP) on January 1, 2007. However, the accounts of clergy who participated in MPP continue to be invested, and benefits are available at retirement or age 62 in the case of termination.Open Enrollment – The annual period during which you may choose to make changes in your benefits (for example, change your medical coverage level or switch plans) for the next year.? Enrollment is usually held two or three months before the beginning of the new plan year.Parsonage credit – A dollar amount used to represent the benefit of a parsonage provided as housing to clergy. The amount is calculated as 25% of a clergy person’s cash compensation.Pre-82 Plan – The Pre-82 plan provides eligible clergy with a defined benefit for their years of ministry with The United Methodist Church prior to 1982. The plan is designed to provide participants with one element of their overall retirement portfolio. The Pre-82 plan was closed to new enrollments and no contributions were made after December 31, 1981. The Pre-82 Plan was replaced by the Ministerial Pension Plan (MPP) effective January 1, 1982. However, clergy who participated in the Pre-82 Plan and are vested are eligible to receive benefits at retirement.Qualifying life event (also change of status) – Certain life-changing events that qualify you to make mid-year changes to your medical, HSA/HRA, FSA and/or dental coverage without waiting until Open Enrollment.? These events include changes in your family status (such as marriage, divorce, or childbirth) or employment status (for example, termination of your spouse’s job).Roth Contributions – Contributions to Roth IRAs are made with your after-tax earnings. The incentive for contributing to a Roth IRA is to create tax-free income for the future. You may take tax-free withdrawals on your contributions at any time and tax-free withdrawals on both your contributions and the earnings after a five-year holding period (assuming you are at least 59?, disabled or using them for first-time home-buying expenses). Total Compensation – Cash compensation (salary) plus housing. Housing is generally equal to either the specified cash housing allowance or equal to parsonage credit. United Methodist Personal Investment Plan (UMPIP) – UMPIP is a defined contribution (DC) retirement plan. Participants can make before-tax, Roth?and/or after-tax contributions through payroll deductions. Personal contributions, plan sponsor contributions made on a participant’s behalf and investment earnings comprise the retirement account balance. Wespath – Formerly known as the General Board of Pension and Health Benefits. Wespath Benefits and Investments (Wespath) is a not-for-profit administrative agency of The United Methodist Church, responsible for the general supervision and administration of the retirement, health and welfare benefit plans, programs and funds for more than 100,000 active and retired clergy and lay employees of the Church. All Wespath plans, programs, services and policies are designed to serve and support the financial well-being of participants and their families in accordance with the values and principles of The United Methodist Church. ................
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