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Clergy Housing Allowance - Contributions and HCE determination


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Your question(s) may need a bit more "precision".  Perhaps they have been addressed previously.  You can go to this page:


and use the "Search".  For example, this discussion is 15 years old:



I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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I did search the Message Board before I posted my questions.  I did not find anything current so I posed the questions.  I am happy to expand my questions to make it clearer what I am asking.  I also added some of what I found elsewhere on this site. I still do not see that my second question has been answered on this site.  I have provided a reworded version below.


1) In a 403(b) church plan is the Clergy Housing allowance included for contributions?

I did find this from BeckyMiller  Posted 12/15/2017:  5

See Rev. Rul. 73-258 which supports what is described above. Housing allowance may be included as compensation for plan allocations.  But the plan would have to specifically state that and comply with Section 415.

I also found the link Lois Baker provided helpful:




2) Is the Clergy Housing allowance included in compensation for purposes of determining if they are an HCE?  (in our plan if the housing allowance is included for HCE determination the clergyperson will be an HCE).



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The answer is "no."  When I have a minute, I will look up the citation, but it is not permissible to use tax exempt payments as compensation in a plan.   Also, why the concern over who is an HCE?   These plans are not ERISA (or should not be).  For what purpose would you  need to have an HCE determination?

"Recently, the IRS has issued a long-awaited private letter ruling that directly addresses the question. Priv. Ltr. Rul. 200121794 (June 7, 2001). This ruling holds that a minister’s tax-free housing allowance may not be treated as compensation under the alternative definitions of compensation permitted by Treasury Regulation sections 1.415-2(d)(11)(i) and (ii). The reasoning used by the IRS is interesting. First, the IRS concluded that excludible compensation like housing allowance does not constitute section 3401(a) wages in the first instance, while the special rule for clergy in section 3401(a)(9) only “excludes from wages taxable compensation paid to a minister . . . .” (emphasis added). Next, the IRS wrote a short treatise explaining why housing allowance does not have to be reported as wages under sections 6041(d) or 6051(a)(3), thus deflecting any argument that those reporting requirements provide a basis for treating housing allowance as compensation under Treasury Regulation section 1.415-2(d)(11)(i)."


Patricia Neal Jensen, JD

Vice President and Nonprofit Practice Leader

|Future Plan, an Ascensus Company

21031 Ventura Blvd., 12th Floor

Woodland Hills, CA 91364

E patricia.jensen@futureplan.com

P 949-325-6727

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