Most workplaces offer the option to save for retirement — often in the form of a 401(k), a tax-advantaged plan named after a section of the Internal Revenue Code. However, nonprofits have the option to offer a 403(b) plan instead. These plans function similarly to 401(k)s by allowing employees to contribute a portion of their salary to tax-deferred retirement accounts. They also allow employers to make contributions to the accounts on their employees’ behalf. In particular, churches and ministries can offer their employees a 403(b)(9) retirement plan.
A 403(b)(9) church plan is a special type of retirement plan that may be offered by:
While this plan is similar to a 401(k) plan offered by for-profit corporations, 403(b)(9) church plan is treated differently under federal law, principally the Internal Revenue Code (Code) and is exempt from the Employee Retirement Income Security Act of 1974 (ERISA).
If your organization is tax-exempt under Code section 501(c)(3) and controlled by or associated with a church or a convention or association of churches, it’s eligible to offer a 403(b)(9) plan.
This plan offers a practical way to help ensure that those who serve so faithfully today can look forward to a more stable and dignified retirement.
Here are five reasons why a 403(b)(9) plan may make sense for your church or ministry.
A 403(b)(9) church plan is not subject to ERISA regulations, so that you can avoid many of the complex and potentially costly administrative tasks associated with an ERISA plan. In addition, a 403(b)(9) plan does not require deferral tests or top-heavy tests.
A 403(b)(9) church plan can allow your church to design a customized plan to meet the unique needs of your staff and budget.
With a 403(b)(9) church plan, your staff and church have several contribution options.
Some of your staff are likely considered a “Minister for Tax Purposes”. For them, a 403(b)(9) church plan can also offer the unique benefit of the housing allowance exclusion during retirement. In other words, part of their retirement income can be designated as a housing allowance and, therefore, excludable from gross income for income tax purposes.
A road to future financial stability can foster a sense of security and gratitude, freeing staff members and ministers to focus on what they do best.
Employees may be more likely to stay with a church that offers robust retirement benefits designed for ministry that don’t compromise their values, helping them care for their family now and prepare for their next season of life and calling.
If you represent a church or ministry organization, you may be eligible to offer a church plan to your employees. However, not all retirement providers have the expertise or the ability to offer and maintain 403(b)(9) church plans.
GuideStone has the unique expertise and experience to help you establish a church plan for your employees. As an integrated auxiliary of the SBC, GuideStone exists to assist churches and denominational entities by making retirement plan services and programs available. Even if your organization is not controlled by or associated with the SBC but is controlled by or associated with another church or denomination, we can still help your organization establish a church plan for your employees.
Serving more than 20,000 churches and ministries, GuideStone is a leader in church retirement plans, uniquely qualified to provide your church or organization with a competitive, customized retirement plan designed specifically for ministry.
Learn more about the retirement plan options available to your ministry.
If you’re ready to talk with the GuideStone team, contact us, and we will work with you to determine the employer-sponsored retirement plan that best fits your organization’s needs.
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