Defined Benefit PlanDefined Contribution Plan

Whoever trusts in his riches will fall . . .

Proverbs 11:28

Be sure you know the condition of your flocks, give careful attention to your herds; for riches do not endure forever, and a crown is not secure for all

generations.

Proverbs 27:23-24

Retirement Planning by the Numbers

■ On average Americans can expect just 37% of the annual income they need in retirement.

■ Fifty years ago there were 42 workers paying into Social Security for each recipient, but now the ratio is 3:1.

WHAT ARE YOU DOING TO PLAN FOR YOUR FUTURE??

How Much Money Will You Need?

.80 x Current Income = Retirement Income Needed

For Example:

Current Income $53,000

x 0.80

Retirement Income Needed $42,400

Power of Compounding

Annual Investment of $2,000 @ 10% (tax deferred)

Current Age Total Deposit Value at Age 65

20 $90,000 $1,581,590

30 $70,000 $596,254

40 $50,000 $216,364

50 $30,000 $69,900

60 $10,000 $13,431

Saving for Retirement Need $2000/month supplement = $24,000/year

$24,000/year @ 6% interest requires $400,000

In order to accumulate this $400,000...

At age 30, need to save $135/month at 9%

At age 40, need to save $354/month at 9%

At age 50, need to save $1,049/month at 9%

At age 55, need to save $2,052/month at 9%

■ CRP contributes 9% of annual compensation – 6% into the Defined Benefit Plan (pension) – 3% into the Defined Contribution Plan (403(b))

DEFINED BENEFIT PLAN

The Pension

Death Benefit■ Active Participants

– There is a Death Benefit equal to one years pay as reported to the retirement plan. There is a 5 year vesting period.

– At age 65, the benefit is reduced to 65% of annual salary.

– At age 67, the benefit is reduced to $2,000.

■ Retirees– There is a $2,000 death benefit payable to the

beneficiary or the participant’s estate if there is no surviving beneficiary.

Disability BenefitThe Converge Retirement Plan will pay to the Defined

Benefit Plan 6% of an active participant’s annual compensation as reported to the retirement plan for those participants who through their disability can no longer continue in their ministry. This payment will

continue until either the disability ends or the participant retires. There is a 5 year vesting period

with this benefit before it is in effect.

Housing AllowanceA Benefit for Ordained or Licensed Ministers and Commissioned Missionaries

■ Up to 100% of a retired pastor’s or missionary’s pension can be considered as housing allowance for tax purposes during retirement years.

■ Housing allowance includes the following:– Down payment on a home– Mortgage payments– Real estate taxes– Property insurance– Utilities (except long distance phone)– Structural maintenance– Yard maintenance and improvement– Maintenance items (pest control, light bulbs, household

cleaners etc.)– Homeowners Association dues

Benefit Increases

The Defined Benefit Plan has had a history of providing benefit increases through out the life of the plan. The example shown is for one retiree who retired in 1984 with a pension of $383.14 per month. Through increases is receiving $1,000.82 per month on

the year 2000.

Year Increase Percentage Total Pension1984 $ 383.141985 20.79% $ 462.791986 9.00% $ 504.441988 6.00% $ 534.711990 14.00% $ 609.571992 10.00% $ 670.531994 3.50% $ 694.001996 10.00% $ 763.401998 15.00% $ 877.912000 14.00% $1,000.82

Benefit Options■ There are 5 options available from which a

participant can choose how to take their pension payments:– Member Life Only– 5 or 10 year certain and life of participant– Joint and survivor receive same amount– Joint and survivor 2/3– Joint and survivor 1/2

Benefit Option Form Header

Converge Retirement Plan Option Form

Dr. John Doe1250 Anywhere StreetSt. Louis, MO Prepared: April 4, 20XX

Master ID: 33322 Spouse Name: JaneCertificate No. 955 Member DOB: 11/21/43

Age: 65 yrs 0 mosSpouse DOB: 11/17/46 Age: 62 yrs 0 mos

Benefit Commence Date: 12/01/20XX Accrual Ceased: 11/30/20XX Deferred Period: 0 yrs 0 mos

Benefit Option Form Option Computation

Annuity Monthly Survivor

Option Factor Benefit Benefit

1. Member Life Only 1.000 3,244.94 None

2a. 5yr Certain and Life 0.989 3,209.25 Bal of 60

2b. 10yr Certain and Life 0.955 3,098.91 Bal of 120

3. Joint and Survivor Same 0.825 2,677.08 2,677.08

4. Joint and 2/3 Survivor 0.869 2,819.85 1,879.90

5. Joint and 1/2 Survivor 0.899 2,915.20 1,458.60

Retirement AgeParticipants can begin receiving their pension at age

60 if they so choose. Unlike Social Security, we have not changed our Normal retirement age. A

participant can receive their full benefit beginning at age 65. Retiring later than age 65 will increase the amount of the participant’s normal pension.

(See the Retirement Section for more information.)

Investment Allocation and Return

■ The Board of Trustees for the Converge Retirement Plan invest the assets of the retirement plan as follows:

– 45% in U.S. equities – Wilshire 5000 Index

– 15 % in Foreign Equities – EAFE 500 Index

– 30% in Bonds (investment grade, primarily treasuries, purchase of individual issues)

– 10% in Real Estate - with a small timberland investment

■ Average Annual Return

– 7.42 ,To Date (2012) – 3.22, 5-year– 8.19, 10-year– 6.80 , 15-year– 8.19 , 20-year

45%

15%

30%

10%

US Equities Foreign Equities Bonds Real Estate

Comparison of Fees

Converge Retirement Plan

■ Investment Fee .272%

■ Admin Fee .210%

■ Total Fees: .482%

Other Funds (Total Fees)

■ Fidelity 1.06%

■ Putnam .80%

■ AIM .80%

■ PIMCO .85%

■ Loomis 1.25%

■ Citizen Core 1.37%

DEFINED CONTRIBUTION

PLANSupplemental Plan 403(b)

ContributionsYou and your employer combined may contribute up

to 100% of your annual cash salary, not to exceed the annual IRS limits (with potential COLA increases in $1,000 increments) into your defined contribution

plan. We encourage your employer to contribute at least 4% on your behalf. The Converge Retirement Plan website www.convergeretirement.org explains the maximum contribution limits for participants in

the current year.

Participant Maximum Contributions■ Deferral Limits for Supplemental Plan are as

follows:

2010 $16,500

2011 $16,500

2012 $17,000 plus COLA adjustments in $500 increments starting in 2007

■ Catch-up contributions (for participants who are 50 years of age or older) are as follows:

2010 $5,500

2011 $5,500

2012 $5,500 plus potential COLA adjustments in $500 increments starting in 2007

Tax Benefits on Voluntary Contributions

■ Contributions made to the retirement plan by the employer (as well as the participant) reduce the taxable portion of the participant’s income.

■ For pastors, it reduces the 15.3% self-employment tax they are required to pay on taxable income.

Tax Credit■ Effective for tax years 2002 through 2006, an eligible individual

is allowed a contribution tax credit equal to the applicable percentage (see chart) of voluntary retirement savings contributions that do not exceed $2,000. The maximum tax credit may not exceed $1,000. This credit is in addition to any deduction of the contribution that may apply.

■ Adjusted gross income excludes housing allowance if you are a licensed or ordained minister. It further excludes foreign earned income.

Joint Return Head of Household All Other CasesApplicable PercentageOver Not Over Over Not Over Over Not Over

$30,000 $22,500 $15,000 50%

$30,000 $32,500 $22,500 $24,375 $15,000 $16,250 20%

$32,500 $50,000 $24,375 $37,500 $16,250 $25,000 10%

$50,000 $37,500 $25,000 0%

Investment Return and Fees

■ Average Annual Returns %– 1-year (2010) 14.50– 5-year 6.56– 10-year 6.28– 15-year 8.41– 20-year 9.16

The Converge Retirement Plan like every other plan has administrative and investment fees. We are

unlike most however in that our fees are 40-45 basis points or 0.40-0.45% of the assets of the plan.

“Steady plodding brings prosperity; hasty speculation brings poverty.”

Proverbs 21:5

Edward Shannon

877.228.5376

847.879.3240

Ed.Shannon@converge.org

convergeretirement.org