self-employed ministers and 403(b) plans

[Guest Frankie]

Am i understanding page 3 in IRS Publication 571 (Rev. June 2001)?

My interpretation would be that if a self-employed minister is employed by a non-501©(3) organization and would like to participate in a church plan such minister must share a common religious bond with the employer (meaning the church).

If a self-employed minister is employed by non-501©(3) organization such minister could set up a 403(B) account on their own and decuct their contribution as long as they do not share a common religious bond with the employer ( meaning the non-501©(3) organization.

I would appreciate any input on this issue

[Carol V. Calhoun]

Hmm, I'm interpreting this a bit differently. It seems to me that a self-employed minister is always treated as if s/he were employed by a tax-exempt organization and therefore eligible for a 403(B) plan. (Paragraph 2 of the eligibility rules for ministers.)

A minister who is employed, rather than self-employed, is eligible for a 403(B) plan under one of two circumstances:

[*]If the minister is employed by a 501©(3) organization, s/he can participate in the 403(B) plan of that organization. (Paragraph 1 of the eligibility rules for ministers.)

[*]If the minister is employed by an organization that is not a 501©(3) organization, s/he can set up his or her own 403(B) plan if s/he functions as a minister, and does not share common religious bonds with the employer. (Paragraph 3 of the eligibility rules for ministers.)[/list=1] The question here is the definition of the word "employed." You refer to a self-employed minister who is employed by an organization that is or is not a 501©(3) organization. However, someone who is self-employed is, by definition, not "employed" by anyone other than him/herself.