Ministry Retirement Plans

What Are The Benefits Of A Roth IRA Or Roth 403(B) Plan?

If you don’t have a 403(b) or 401(k) plan available, fund an IRA. Many small employers, ministries, or faith-based organizations don’t have the money or experience to offer a retirement plan at all, let alone one with either a basic or matching contribution. This means you have to start your own retirement plan. Like the 403(b) or 401(k), an IRA can accommodate either pre-tax contributions (you save taxes now) or Roth contributions (you save taxes later). 

Roth Benefits

The benefits of a Roth 403(b) and Roth IRA are that principle and earnings grow tax free so there will be no taxes taken at the time of distribution if you are at least 59 1/2 and have had the Roth account for 5 years.

If you do not have access to a Roth 403(b), then a Roth IRA is the next best choice. The Roth 403(b) allows you to contribute more, but contributing up to the IRA limit is better than not contributing at all.

Learn more about Church Retirement Plans.

Along with faith-based retirement plans, Envoy also offers faith-based IRAs.

Understanding ERISA Versus Non-ERISA Retirement Plans

ERISA Plans

ERISA organizations are subject to the rules promulgated by The Employee Retirement Income Security Act of 1974 (ERISA). This Act identifies reporting requirements, fairness procedures, and fiduciary requirements that plan sponsors and other fiduciaries must follow when setting up a retirement plan. These requirements are considered “best practice” for all organizations; however, these requirements do not directly apply to Non-ERISA Plans.

The primary functions of ERISA include: 

  • Requiring the disclosure of financial and other information concerning the plan to Participants and their beneficiaries; 

  • Establishing standards of conduct for fiduciaries; and 

  • Providing for appropriate remedies and access to the federal courts.

Non-ERISA Plans

Non-ERISA plans are those 403(b) plans that involve voluntary plan participation only. In other words, the employer is not contributing. Another parameter around this distinction is that all Church Plans are considered Non-ERISA.

Therefore, if your organization is a church, you want to ensure that you have a 403(b)(9) Church Plan. If your organization is not a church, and makes plan contributions of any kind (also known as “matching”), your retirement plan falls under the ERISA oversight rules. We hasten to say, that the ERISA regulations are very informative and add a high protection value to either a 403(b) or 401(k) Plan.

Non-ERISA plans need to conform to the 403(b) regulations as established by the Internal Revenue Service.

ERISA plans need to conform to the 403(b) or 401(k) regulations as established by the Internal Revenue Service and the ERISA regulations as established by the Department of Labor. 


Learn more about Church Retirement Plans.

What is a 403(B)(9) Retirement Plan?

You may already know what a 403(b) retirement plan is and why you might choose it over a 401(k) plan. But do you know what a 403(b)(9) plan is? How do you know if it’s right for your ministry?

Simply stated, 403(b)(9) plans are for churches, or those with 501(c)(3) church status, while 403(b) and 403b(7) plans are for everyone else. There is no reason to use a 401(k) plan when you are a non-profit 501(c)(3)—church or not.

What Are the Benefits of a 403(b)(9) Plan?

One of the biggest benefits of 403(b)(9) plans is that they offer the Minister’s Housing Allowance distribution at retirement. This allows a minister who is ordained, licensed, or commissioned to receive a designated portion of their salary that is excluded from gross income and not subject to federal income tax.

403(b)(9) Plans are also not subject to certain ERISA requirements.

Not sure if you have a 501(c)(3) church status?

Reference your determination letter from the IRS. This notification will state whether you are classified as a church under section 501(c)(3) of the Internal Revenue Code.

Learn more about Church Retirement Plans.