Background:
The Reform Pension Board ("RPB") sponsors an Internal Revenue Code Section 403(b) tax qualified pension plan for the benefit of rabbis, educators and temple administrators affiliated with the Reform Movement. Amendments to the Plan must be made by the CCAR and UAHC.
It is proposed that the RPB now sponsor a Roth individual retirement account ("IRA") program. The advantage of such a program is best illustrated by example. Assume that the RPB is receiving an $8,000 contribution in behalf of a rabbi, educator or temple administrator. Normally, none of the $8,000 contributed to the program would be includable in the participant's income and the funds so contributed will grow free of tax and then be distributed during retirement. These distributions during retirement are subject to ordinary income tax. By contrast, contributions to a Roth IRA are not deductible when made, the funds grow free of tax (as in the RPB plan), but upon distribution, the funds are not taxable (neither the monies originally put in nor the earnings thereon). This results in a significant tax advantage, particularly for younger participants. So eligible employers will be encouraged to contribute the maximum amount permissible to the RPB Roth IRA ($2,000) with the remainder ($6,000) going to the "regular" RPB plan.
The RPB Roth IRA will be fully integrated and subject to the same terms and conditions as the "regular" Rabbinical Pension Plan. For example, spouses will have rights in the funds and distributions will only be made upon retirement (since the entire purpose of the program is to see to it that there are sufficient funds for the participants upon their retirement from the Reform Movement). By contrast, a regular Roth IRA can be obtained at a bank or other financial institutions and is under the control of the participant, who determines when distributions are to be made.
In order to implement this program, the following resolution needs to be adopted by both the CCAR and the UAHC and then the trust instrument that governs the RPB Roth IRA must be signed by officers of the CCAR and the UAHC (as well as by the members of the RPB, who serve as the trustees of the RPB Roth IRA).
The Resolution reads as follows:
RESOLVED, that the UAHC approves the creation of the RPB Roth IRA and the Trust created in connection therewith and that counsel to the RPB is authorized to submit ruling requests to the Internal Revenue Service in connection with the RPB Roth IRA.