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403(b) plan compensation, ministers, and housing allowances


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Looks like you got an answer to this one on the Church Plans message board, from my former partner Danny Miller, who definitely knows what he is talking about in this area.

http://benefitslink.com/boards/index.php?showtopic=2050

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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Are ministers who are eligible for the 107 exclusion for housing allowances (parsonage allowance) always treated as self-employed for self-employment tax purposes? Or could they be treated as employees subject to FICA?

I'm confused. It seems that the housing allowance is only available if the minister is performing religious functions, and that seems to make him or her self-employed (or at least subject to self-employment taxes). But I've also seen information that says that a minister can be an "employee." Is the idea that the minister can be an employee, but will nonetheless be treated as self-employed.

I have an unusual situation - a 403(B) plan defines compensation for purposes of contributions as FICA compensation. I have a minister who gets a housing allowance. My ultimate question is whether the housing allowance is included in compensation for purposes of the 403(B) plan.

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