FAQs

CHURCH LOANS

What fees can we expect?

There is a one-time service fee of 1.5% based on the loan amount. This fee is usually added into the loan. The buyer pays closing costs, including the title insurance policy, recording fees, fire insurance policy, appraisal fees, legal fees, etc. These costs are paid directly to the agency or person providing the document or service. Monthly payments are due the 20th of each month, and a late charge is assessed if no payment is received within 10 additional days. If additional security is added to the loan, a new service fee of 1.5%, based on the additional funds, will be added. The buyer will also be responsible for additional title and closing costs.

Are there any balloon payments?

No.

What are your interest rates?

CEP’s loan interest rates are based on a variety of underwriting criteria, including a ministry’s financial strength, the type of project, the time frame, etc.

Is the loan interest rate fixed?

CEP has two types of loans: Fixed and Adjustable Rate Mortgages. If you choose a fixed 20-year loan, CEP will adjust and fix the rate according to our current rate chart and certificate base at the time of the commitment. If you choose an Adjustable Rate Mortgage (ARM), CEP will review your loan rate every three or five years, depending on the term set at the time of commitment. Rate reviews will continue until the loan is paid-in-full. There is a 2% cap per review and a 4% lifetime ceiling.

Is there a prepayment penalty?

No.

Can the loan be funded in phases?

If your ministry is simply refinancing an existing loan, the loan will be funded in its entirety at closing. If your loan is for construction or a remodel, the loan is funded progressively. This is a great benefit to the church because monthly payments will only be charged on the amount borrowed at the time. Progressive funding also makes it easier to keep track of which projects have been completed and paid for and ensures the project will be completed within the loan amount.

Can we add on to our existing loan?

Generally, yes. If you choose to increase your funding beyond your original project, you must submit a loan expansion request in writing. Our loan committee will then review your request. If all the pre-qualification criteria is met, funds will be added onto the original loan.

Do we need co-signers?

No. Church officers are required to sign all loan documents, but they are not required to sign as co-signers.

Is volunteer labor permitted?

Yes!

INVESTMENTS

How often do rates change?

Investment rates on new offerings are subject to change at any time.

Will the interest rate go up if I increase the principal amount invested?

Interest rates are determined by the terms of your investment, not by the dollar amount invested.

Am I allowed to make withdrawals from my note(s)?

The 30-day Access note provides penalty-free withdrawals. Thirty days written notice is required. Term notes are set up with the intention that the funds will stay in the account until maturity. Currently, early withdrawals can be made from these notes with a 30-day written notice and will result in a six-month interest penalty.

Can I continue to add to my investment note?

Typically, yes, you can add to your note at any time. As we continually strive to offer the lowest possible loan rates to Assemblies of God churches, notes earning rates significantly above our current investment offerings are occasionally closed to additions. If this applies to any of your notes, we will give you 30 days advance notice.

Will the maturity date change if more funds are added to the note?

No.

Are CEP's investments secured or insured?

Vision investments are not “secured.” Your investment is backed by mortgages on loans made to churches and CEP’s other assets. CEP maintains an excess in assets, currently over $10 million. Our investments cannot be covered under the FDIC insurance program because Church Extension Plan is a ministry, not a bank.

Where does CEP invest my money?

All investment dollars go to support the expansion of Assemblies of God churches and ministries through our loan program. Cash reserves are in bank, money market, and very conservative mutual fund accounts. The variety allows for balance when one part of the economy softens (the other part usually does the opposite).

What happens to my investment if I die?

Your beneficiaries will need to contact CEP and provide a certified death certificate. They will also need to inform CEP in writing whether they want to cash out the investment note(s) or hold it to maturity.

Can I put my investment note in the name of my trust?

Yes. You will need to provide a copy of your trust agreement or complete a Certification of Trust Agreement form. CEP requires that we have one of these items before we can set up your investment note in the name of a trust.

IRAs

What are your current IRA rates?

Please review our current rate chart.

What types of IRAs do you offer?

Traditional, Roth, Coverdell ESA, Spousal, and SEP.

What is the difference between a Traditional IRA and a Roth IRA?

Traditional IRA: Contributions to a Traditional IRA may be tax-deductible, and the interest earned is tax-deferred. Regular distributions from a Traditional IRA are taxable. You must begin taking distributions after the age of 70 ½ and can no longer make contributions.

Roth IRA: Contributions to a Roth IRA are not tax-deductible, and the interest earned is tax-deferred. Regular distributions from a Roth IRA are not taxable. You are not required to take distributions by 70 ½ and can continue to make contributions as long as you have earned income. Your Roth IRA has to be established for a minimum of five years before you can take tax-free distributions.

Can I take distributions from my IRA?

Yes! You can take penalty-free distributions from your Traditional IRA once you turn age 59 ½. For Roth IRAs, you can take distributions if you are 59 ½ and have had your account open for at least five years. Church Extension Plan does not assess any penalties for distributions from IRAs. However, there is a six-month interest penalty for transferring your IRA to another custodian before your term is up.

Can my IRA be set up in a trust?

No. IRAs must be held in the name of an individual. If the person is married, the spouse usually is the primary beneficiary and the trust is the contingent beneficiary. If the person is not married, the trust can be the primary beneficiary.

What is the Required Minimum Distribution (RMD)?

A RMD is an amount of money the IRS requires you to take from a Traditional IRA account once you reach age 70 ½. The dollar amount is determined by a calculation of your age and end balance of the previous year.

403(b)

Who is eligible for the 403(b) ministry retirement plan?

Current employees of Assemblies of God churches/ministries or a self-employed licensed or ordained minister of the Assemblies of God. If a person is a retired credentialed minister, they may transfer funds from another qualified retirement account to CEP’s 403(b) plan.

Does CEP offer another retirement option if I don't qualify for the 403(b) plan?

If you are not eligible for CEP’s 403(b) ministry retirement plan, you may be eligible for CEP’s Individual Retirement Account or Individual Investments.

How much can I contribute?

There are a few different limits for the 403(b) retirement plan. The amount you can contribute from your paycheck is $18,000 per year or 100% of your taxable compensation, whichever is less. If you are age 50 or older, there is a catch-up amount of $6,000 you can contribute each year. There are other limits for employer contributions that are also based on your taxable compensation. Contact CEP for details on those limits.

Can I take distributions out as housing allowance?

Yes, retired ministers can potentially designate all or a portion of their withdrawals as housing allowance. (Housing Allowance form must be submitted to CEP prior to the withdrawal.)

 

What are my investment choices?

There are several investment funds to choose from. One fund is the Vision fund offered CEP. This is the fund used to provide loans to Assemblies of God churches and ministries. There are also several mutual fund choices offered through Envoy Financial Securities. Contact CEP for a current list of available fund options.

How often will I receive statements?

403(b) statements are sent out monthly.

 

Are there any fees to have a 403(b) retirement account with CEP?

There is a $3 monthly maintenance fee charged to your account. See the fund prospectus(es) for fees associated with investing in the mutual funds. There are no other fees when investing in the Vision fund, which is CEP’s loan fund.

Can I transfer money from another 403(b)?

Yes, if your current plan allows for such transfers and you meet a trigger event as defined by the IRS.

Can I take a distribution when I need funds?

Distributions are very restricted for 403(b) retirement plans. In order to take a distribution, you must meet a triggering event as defined by the IRS. The triggering events are as follows: attained age 59 ½, separated from service, retired, or death.

How does a 403(b) retirement plan work?

A 403(b) retirement plan is an employer sponsored retirement plan and can only be funded through your employer. Your employer completes an Adoption Agreement that determines who is eligible to participate and what types of contributions will be made to the plan. It provides a way for you to save for retirement on a pre-tax basis, and your earnings are tax-deferred. You can make salary deferral contributions from your paycheck, and your employer can contribute on your behalf.

Can I change the amount of my salary deferral contribution?

Yes. Just notify your payroll manager.

Can I stop my contributions?

Yes. Just notify your payroll manager. You can resume at any time by contacting your payroll manager.

Can I continue making contributions if I change employers?

Yes, as long as your new employer is a participating employer. A participating employer has completed an Employer Adoption Agreement with CEP.

What happens if I contribute more than is allowed?

The IRS assesses a 6% penalty on excess contributions each year. It is your and your employer’s responsibility to know what your contribution limits are. See IRS publication 571 for more information at irs.gov

Can I change the fund(s) in which my contributions are invested?

Yes. You may change the allocation of funds at any time. Contact CEP for specific instructions.

 

Will I be penalized for taking funds from my retirement account?

There are mandatory tax withholding rules that apply to employer retirement plan distributions. If you are under age 59 ½, the IRS assesses a 10% early distribution penalty. Distributions that qualify to rollover to another retirement account have 20% federal taxes withheld. You may qualify to take a distribution as Housing Allowance if you meet certain criteria. The Housing Allowance declaration provides a waiver of the mandatory 20% tax withholding. However, you are responsible for reporting the distribution and the taxable amount on your tax return.