What Is a Church Retirement Plan?

A Church Retirement Plan is designed for the unique needs of a church or parachurch organization.

403(b) vs. 401(k): What type of plan is best for your church?

In its simplest form, the 403(b) is cheaper to establish and administer. The primary reason is due to the fact that 403(b) plans require less reporting and testing. We have seen that a majority of 401(k) plans are often recommended by advisors not familiar with 403(b) plans and how they can benefit ministry organizations.

A simple way to remember the distinction between these two plans is that 401(k) plans are used exclusively by "for profit" organizations, as all of these organizations fall under ERISA Regulations.


ERISA organizations are subject to the rules promulgated by The Employee Retirement Income Security Act of 1974. This act identifies reporting requirements, fairness procedures, and fiduciary requirements. These requirements are considered "best practice" for all organizations; however, these requirements do not directly apply to 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. Bottom line—403(b)(9) plans are for churches or those with 501(c)(3) church status.

403(b)(9) Church Plan Highlights

Participation Flexibility
Church Plans are allowed to choose which employees or group of employees will receive employer retirement plan contributions. Further, the church can decide how much each person, or categories of persons, will receive contributions. You can discriminate.

Housing Allowance
This allows Participants to take non-taxable, ministerial housing allowance distributions in retirement from their 403(b)(9) plans—a big tax break.

Pre-SECA Tax
All monies contributed by the Participant with a ministerial status are made Pre-SECA tax. This is another large tax advantage for those who qualify and are not “opted out” of social security.

As you can see, the flexibility to choose who participates and how much they receive are big distinguishing characteristics of Church Plans.

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.