Must ministers pay Social Security Tax on 403(b) distributions if continuing in ministry?
Some have mistakenly believed that clergy who receive retirement benefits but continue their service in the ministry will have to pay self-employment taxes on their retirement benefits designated as housing. Ministers Simply DO NOT. If you are a minister and have been told that you must include this on your schedule SE, it is incorrect advice.
Doing so will cause you to lose considerable tax savings and opportunities that Congress has intended you to have. Simply put, any denominational retirement 403(b) that is set up and administered properly or the Clergy Advantage 403(b) will completely bypass all Social Security tax on money going in and money coming out.
This is a unique advantage available only to clergy. (Hence the name of the Clergy Advantage 403(b) retirement plan, which is designed for that very purpose). To learn more about the Clergy Advantage 403(b) plan, click here.
Don’t miss the retirement advantages and housing allowance strategies for ministers that can help you save tax and become financially independent in our free video, “Retirement for Ministers.”