What Are The Special Requirements for Housing Allowance After Retirement?
To take a distribution with special housing allowance tax treatment, you must be at least age 59½ and receive a Housing Allowance Authorization Letter from your church or governing organization.
Housing Allowance Distributions
You can request one distribution and have a portion of that distribution be treated as housing allowance and another portion a regular distribution. You will receive one check or one electronic payment (ACH) for the total amount of the distribution less any elected tax withholding.
You may designate a percentage to be withheld from any taxable portion of your distribution, but you will be responsible for any estimated tax and any penalties incurred as a result of that decision.
Making Changes to Your Special Housing Allowance Tax Treatment
You are responsible for submitting a new Distribution Authorization Form—Special Housing Allowance Tax Treatment to Envoy. If you do not submit a new Distribution Authorization Form—Special Housing Allowance Tax Treatment to Envoy, your original Housing Allowance amount as elected on the form will continue from one tax year to the next for recurring payments.
Your payments will continue until you stop the payment or until your account balance is depleted. If you wish to stop payments, please contact Envoy.
Can You Take a Housing Allowance Distribution if You’ve Rolled Over to an IRA or 401(k)?
No, this is why it is important for pastors to keep their money in a 403(b) and not rollover into an IRA or 401(k).
However, if you get a new job, you can roll back into a 403(b), and then have housing allowance eligibility.
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* Envoy does not offer legal or tax advice and encourages that you consult with a lawyer and/or professional tax advisor for personalized tax advice.