|Rabbinic Retirement Plan
The Igud HaRabbanim / Rabbinical Alliance of America, a national Orthodox Rabbinical organization, is committed to the support of its member Rabbonim in all aspects of their professional lives. Thus, we offer assistance with regard to discussing and answering שאלות, networking with other Rabbonim in communal endeavors, referring litigants or couples to our Beis Din, providing Rabbonim with contract guidance and career counseling, and, most recently, providing a retirement plan that is specifically tax-advantaged for Rabbonim and Mechanchim.
Investing in one’s future retirement brings together two Ma’amorei Chazal that we are all familiar with: 1) אם אין קמח אין תורה, and 2) החכם עיניו בראשו. During our working years, we generate with Hashem’s help the income we need to pay the bills; once reaching retirement, though, how are we to manage? Don’t think that Social Security will provide the answer. In the best of times, it replaces only about 40% of one’s pre-retirement earnings; additionally, economists estimate that the federal Social Security trust fund will become depleted in 15 years. So we need to identify an additional source of retirement funds. This is where the plan of the Igud HaRabbanim comes in, providing the קמח for the תורה learning of the retirement years.
The plan, briefly, allows the Rav or Mechanech to contribute pre-tax dollars during his working years, invest them in a range of mutual funds, and then withdraw the appreciated amounts during retirement. Current income tax rules provide that a Rav who, during his years as a Plan member, claims the parsonage (housing allowance) tax exemption may also have the opportunity to receive retirement payouts as additional parsonage, tax free. The idea here is that the law recognizes the clergyman’s housing needs as tax-free even after retirement. This could potentially represent a substantial benefit to the plan member, especially when compared to corporate plans (TIAA, Vanguard, etc.) which withhold income tax upon withdrawal.
Some highlights to keep in mind when considering whether to join the plan:
- כל התחלות קשות. Startup is always challenging; beginning your retirement savings is no different. This plan provides you a simplified way to simply begin, thereby getting past that first difficult hurdle.
- The tax-advantaged nature of this plan could translate into higher effective returns. If you live in a high-tax state such as New Jersey or New York, where marginal tax rates (federal, state and local) easily add up to 30%, your retirement funds could gain an immediate boost.
- Many organizations find it in their interest to help their employees achieve long-term financial stability. One way is by contributing to a retirement plan. A shul or school may look favorably on a Rabbinic retirement plan and match a percentage of the Rav’s contribution on a monthly or annual basis.
- The funds contributed are professionally managed in a 403(b) account by PenServ Plan Services, a retirement benefits company. They offer over 30 different mutual funds in which to invest, including index funds and target-date composite funds. Please see the accompanying brochure, which includes their fact sheet and an account application.
To summarize, at the Igud HaRabbanim we seek to enhance the experience of each member Rav, whether pulpit Rabbi or Mechanech, and thereby assist his individual ability to serve Klal Yisroel. This current initiative involves finances, specifically planning for retirement, which when done properly can afford the Rav ישוב הדעת. We invite you to join the Igud HaRabbanim and thereby qualify for this plan; the annual Igud membership fee of $125 confers many benefits, beyond planning for retirement. Perhaps most importantly, it gives you a voice in a national organization that is dedicated to being מרבה כבוד שמים.
Retirement Plan Committee:
Rabbi Yaakov Klass
Chairman, RAA Presidium
Rabbi Moshe Schmerler
Rabbi Mendy Mirocznik
Rabbi Yehuda Blank
Dir, Chaplaincy & External Affairs
Rabbi Yaakov Shulman
Menahel, Beis Din
Special Financial Adviser
For more information:
Telephone: 833-RAA-IGUD (833-722-4483) Ext. 5