Archdiocese to offer 401(k) plan in 2012

BRAINTREE -- The 3,000 lay employees of the Archdiocese of Boston and its related entities will have a new retirement savings option once the new year comes.

The archdiocese is rolling out a 401(k) plan for employees beginning in January 2012.

The new plan coincides with the freezing of the archdiocese pension plan and various voluntary 403(b) retirement saving plans used by different branches of the archdiocese.

On Oct. 11, two informational meetings on the new retirement plan were held at the Pastoral Center. Additional meetings will be held at various locations in the archdiocese, along with other times at the Pastoral Center.

All employees from parishes, archdiocesan related Catholic schools and cemeteries, and the Pastoral Center will be able to contribute a portion of their earnings to the 401(k) when the plan starts. Full-time employees, with one year of service, will be eligible for employer contributions, but will not be able to withdraw those funds, until they have completed five years of service.

Priests of the archdiocese will be able to contribute from their own salary, but whether they will be able to receive employer funds has not yet been decided, according to Carol Gustavson, archdiocesan director of benefits trust and plan administrator.

Plan participants will be able to rollover funds from the pension plan, an archdiocesan 403(b) plan, other retirement plans, and IRAs. These will not be taxed if they are qualified plans. They can also defer up to $16,500 of salary annually on a pre-tax basis. Those over 50 can defer an additional $5,500.

In 2012, employers of the archdiocese will contribute up to 2 percent of an employee's annual earnings, though the employee must have a year of service and work at least 1,000 hours. In subsequent years, employer contributions will vary. These funds will vest after an employee's five years of service, again with at least 1,000 hours annually.

The new plan will be administered by TIAA-CREF and the plan's registered investment advisor will be Graystone Consulting, a part of Morgan Stanley Smith Barney. Graystone will evaluate investment funds and will serve as fiduciary to the plan.

In regards to the vendors, Gustavson said that the process had been set up "very carefully."

"Different vendors with very distinct responsibilities, all of whom basically have an obligation to the retirement committee and the archbishop to do the best job possible," she said.

TIAA-CREF has set up a series of one-on-one consultation sessions for employees, and Graystone Consulting will also be able to be contacted directly for fund consultation.

Graystone will be contractually obligated to recommend investment funds, are paid a flat fee, and are not allowed to recommend their own funds, according to Gustavson.

"If there's a fund that's underperforming, or that looks like it's really more expensive than we're all getting from it, their job is to say, 'We need to make a change,'" she said.

According to materials distributed to employees at the Oct. 11 meeting, 401(K) plan participants will be able to choose among 27 different investment funds, including the Ave Maria Catholic Values Fund, which is described as an equity mutual fund that invests in companies "that do not violate core teachings of the Roman Catholic Church."

There will be no front loaded fees or sales charges on mutual funds offered in the package, according to Gustavson.

Archdiocesan pension plan participants over age 55 have until Nov. 15 to decide if they would like to take their pension as a lump sum, or keep it with the existing pension plan. If they have already made their decision, they can reverse it due to the new information in the 401(k) plan.

In addition to the defined benefit pension plan, archdiocesan employees currently have the option to make retirement savings contributions to a voluntary 403(b) plan with no employer contribution. A 403(b) plan operates similarly in many ways to a 401(k) plan but may only be offered by not-for-profit organizations.

Gustavson said that investigating new plan retirement options, a survey found more than 15 different 403(b) plan vendors being used among archdiocesan-related employers.

"It's very disjointed -- administratively not overseen. Technically it's one plan, but there's no oversight. There's no oversight over the investments, over the expenses, over recordkeeping -- anything," she said.

Gustavson said the archdiocese decided not to implement another 403(b) plan and instead to go with the more popular 401(k) because record keeper and vendor options were more "definitely more robust."

"We're going to actually have a real centralized plan that's fair, equitable, and universally accessible and is a really strong plan for everyone," said Gustavson.

For more information on the 401(k) plan and informational meetings, along with pension information and meetings visit