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Housing allowance


Guest rl6148
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Please describe how parsonage/housing allowances are offered in 403(b) programs. Requests for proposal often include a reference to "recordkeeping" the parsonage/housing allowance. What is involved? Does it entail allowing or deferring a parsonage amount? Or is it allowing a designated amount of the distribution to be withdrawn tax free? Are Sponsors expected or required to provide the taxable and nontaxable portion of such withdrawals?

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Basically, the plan designates an amount or percentage of the distribution that is the maximum amount available as a housing allowance. The minister has to determine what portion of that amount qualifies as a housing allowance.

Here is a previous thread:

http://benefitslink.com/boards/index.php?showtopic=24672

The first link appears dead. The publication does not say it is copyrighted, but the file appears to be too large to attach. It's 3,424K. I can e-mail it to you if you want it.

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  • 5 months later...
Guest HLIFECraigo

A record keeping question for all you wise folks.

Our recordkeeping system has a place to input a housing allowance value or percentage on a distribution that will reduce ordinary income for puposes of withholding and reporting on 1099R.

I have suggested that check stubs going out should display the used parsonage value and the unused parsonage value so that the member of the clergy has enough info at 1040 filing time to complete their taxes.

Our marketing and legal department prefers to not even take in the housing allowance value or percentage but rather produce a 1099R with box 2b checked (value of ordinary income could nut be determined) and the ordinary income field would be set to 0.00. This is in the event that the disbursement forms indicates that the participant is subject to use the housing allowance. What's amusing is that they still want the system to withhhold on the taxable portion prior to reporting on 1099R.

Just wondering what other forms are doing out there for the Ministers Housing Allowance.

Thanks

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  • 6 months later...

We designate the distribution as either taxable or non-taxable at the time of the distribution and require a Manse letter at the time of the distribution. For monthly pensioners we have the ability to designate the amount for the year so the 1099-R is correct. We have never explored updating the stubs to state unused portion. It would be a good idea as it might clear up some confusion for us. It sounds like our systems have similar capability.

My distribution team would love to just check the box of undertermined amount, but I think that would mean we would be required to withhold the mandatory 20%, even though a majority if not all could be non-taxable.

The problem we have is with changes to Manse during the year, or not receiving the Manse letter before the distribution even though it was designated. Does this ever come up with you?

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  • 1 year later...
Basically, the plan designates an amount or percentage of the distribution that is the maximum amount available as a housing allowance. The minister has to determine what portion of that amount qualifies as a housing allowance.

Here is a previous thread:

http://benefitslink.com/boards/index.php?showtopic=24672

The first link appears dead. The publication does not say it is copyrighted, but the file appears to be too large to attach. It's 3,424K. I can e-mail it to you if you want it.

It's been a long time since this thread was active but I would love a copy of the publication you mentioned. statcat@hotmail.com thanks

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