Ministry Retirement Plans

What Is a
Church Retirement Plan?

A Church Retirement Plan, or 403(b)(9) Plan, is designed for the unique needs of a church or those with 501(c)(3) church status.

Who is Eligible for a Church Retirement Plan Contribution?

All participants of a church retirement plan must be employees of the church. The employer of church retirement plans is allowed to choose which employees or group of employees is allowed to participate in the plan. Further, the employer can decide how much each person, or categories of persons, will receive in employer contributions. In other words, you can have different amounts of contributions for each person. Often eligibility includes age and service minimums.

Church Retirement Plans Are Non-ERISA Plans

All Church Retirement Plans are considered Non-ERISA. Non-ERISA organizations are not subject to the rules put into place by The Employee Retirement Income Security Act of 1974 (ERISA). Therefore, if your organization is a church, you want to ensure that you have a 403(b)(9) Church Plan. Again, these plans DO NOT fall under ERISA regulations, which requires that tax-deferred accounts undergo periodic reviews known as discrimination testing. This saves the cost of an audit, form preparation, and testing requirements.

What Are the Benefits of a Church Retirement Plan?

  1. Participation Flexibility—The employer has the flexibility to decide whether to use universal availability or to choose which employees are allowed to participate in the plan. As an example, an employer may impose age and/or service requirements before an employee can participate in the plan.
  2. Housing Allowance—Allows ordained, licensed, or commissioned ministers to take non-taxable, ministerial housing allowance distributions in retirement from their 403(b)(9) plans, a big tax break. Ministers can contribute to their plan tax free. They can also receive distributions in retirement tax free. This is a huge benefit.
  3. Pre-SECA Tax—All monies contributed by the participant with a ministerial status are not subject to Social Security tax or income tax. They are made pre-SECA tax—a 15.3% tax savings.
  4. Time and Cost—403(b)(9) plans are less expensive to administer. These plans DO NOT fall under ERISA regulations, which requires that tax-deferred accounts undergo periodic reviews known as discrimination testing. This saves the cost of an audit, form preparation, and testing requirements.

Note: A Roth 403(b) retirement plan allows missionaries abroad to contribute to a Roth 403(b) resulting in tax-free growth and distribution. Because of this option, participants can contribute after-tax, meaning they will not have to pay tax on that money when it is time to use it in retirement.

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How do you know what type of retirement plan is right for your ministry? Read Choosing Between a 403(b) and a 401(k) Retirement Plan.

Learn more about Envoy’s Church retirement plan options today!

* 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.