What if my retirement plan doesn’t offer faith-based funds?
The opportunities for Christians to align their investments with their faith values have never been better! Beacon Wealth Consultants has helped Believers with biblically responsible investing for over 25 years and many individuals and families have discovered the joy and freedom that comes with planning and saving for your financial goals and being a good steward at the same time.
The next great frontier in expanding the faith-based investing movement is making it available to as many people as possible. Most faith-based investing options are limited to those with investable assets in accounts like IRAs or taxable accounts, there are few options available for the many Americans whose main investing vehicle is their 401(k) or 403(b).
We believe that every follower of Christ should, at the very least, be presented with the opportunity to invest his or her resources in a manner that is in alignment with and honors their faith values. This is why we created our LightPoint™ Portfolios and the faith-based 401(k) and 403(b) plans that we manage.
But what do you do if you are a Christian who wants to invest in a way that honors your faith, but your 401(k) or 403(b) doesn’t have faith-based funds? You have a few options available to you, so let’s take a look:
Ask your company to add faith-based funds
Your first option is just to ask your company if they can add faith-based funds to the available choices. This will give you the opportunity to share your values with your employer and reasons for wanting to see these types of funds in your plan. Who knows, there may be others at your company who would also be interested in faith-based investing options! Some retirement plan providers will add fund choices if the employer requests it, so your first options is just to ask your employer about adding them. Most employers want their employees to be excited about and participate in the retirement plan so they may help accommodate your request.
Use an available participant directed option
Your employer may not want to add more funds to the plan, or the plan provider may not allow it. In that case another option is to see if your plan has a participant directed option. Some plans allow participants to put a portion of their contributions into an account that allows the participant to choose from a broader selection of mutual funds and ETFs. The advantage is that it allows the person to build a portfolio using a variety of faith-based funds that are publicly traded. The disadvantage is that all the responsibility of choosing funds, diversifying the portfolio, rebalancing, etc. falls on the participant. If you decide to use this option, we recommend meeting with a Christian financial advisor who can help you choose among the different faith-based funds available.
One of our employees, David, used this option at a prior job. His employer would not add any new funds but allowed participants to open a participant directed account. David says, “After praying about it, I felt strongly that I should use the participant directed account. I definitely had more work on my end to research and choose the funds, but I knew that if I didn’t, I would be investing in things like abortion and pornography, and I just couldn’t stomach that. The extra responsibility of selecting funds was worth the peace of mind.”
Invest in an IRA
If your retirement plan doesn’t offer faith-based funds, then one of your options is to use an IRA. Both traditional and Roth IRAs provide investors with a broad selection of investments, including biblically responsible investments. Beacon Wealth Consultants manages IRAs that feature our actively managed LightPoint™ Portfolios but you can open an IRA through many other institutions.
If your employer offers matching funds, you could contribute enough to get the match and put the rest in an IRA. Or if your employer doesn’t match your contributions, you could always just use the IRA. One catch is that IRAs have income and contribution limits. For those eligible to contribute to an IRA, contributions are capped at $6,000 (plus $1,000 catch-up if you’re over 50) for 2022. The contribution limit for an employer sponsored plan is $20,500. That’s quite a difference, so depending on your income level and how much you want to contribute you may need to use a combination of IRA and retirement plan to reach your savings goals.
Ask your employer to consider Kingdom(k) or Kingdom(b)
We’re biased, but we think our Kingdom(k) and Kingdom(b) plans are great options! We include our five fully asset-allocated risk-based portfolios in our plans along with a full range of other funds to suit the risk profiles and investing preferences of plan participants at all stages of their careers; also meeting the requirements of the Department of Labor. We also act as the fiduciary investment manager on our plans – a big bonus for employers!
Most employers look at other plan providers every few years as part of their due diligence process so letting them know about our options can actually help your employer with their evaluation process. We use a guided process to help employers know if Kingdom(k) or Kingdom(b) is right for the organization.
We are always excited about those seeking to honor the Lord with their investments! Even if your work retirement plan is your primary investing vehicle, you are not without options. Praying about and pursuing one of the options above may enable you to follow your desire for faith-based investing. If you’d like to understand these options further or would like us to meet with your employer about our retirement plans, please reach out!