Ministers - MEA, Housing Allowance Compensation

[Guest JThomas]

(Refered from 403(B) Board:

With respect to an active minister (3yrs) contributing to a 403(b)plan. What would be "includible compensation" for purposes of calculating the MEA (Maximum Exclusion Allowance)?

- Base Pay

- SECA Reimbursement by Church (=7.65% including Housing)

- 403(B) Salary Reduction Contributions

- Housing Allowance

I have received conflicting opinions as to whether it should be 1) Base Pay only; 2)Taxable Income (Base + SECA), or; 3)Base Pay + SECA + Housing Allowance.

Thanks!

Also, the results of the MEA calculator we are using seem strange when comparing the MEA for 16500 v. 17500 income

($3,000 v. less than $1,500 allowed reduction/contribution)

I also see (IRS Pub 571) a Special Election for church employees in addition to the "any year limit" and "overall limit" which seems to be $10,000 each year to a lifetime max of $40,000. What counts in the $40,000 - the entire contribution in any year you choose to exceed the "general election" or the excess over the general election. I would assume the general election for a minister is never less than $3,000 (unless total comp for the year is less than $3,000). I also assume choosing this special election means the minister could NEVER choose the "any year limit" or "overall limit" - but could continue to use the general limit or "year of separation limit".

Finally, do you use fractional years of service in the calculation? e.g. 3.25 for 3 years, 3 mos service.

Thanks for your help and consideration!

[Edited by JThomas on 08-29-2000 at 09:50 PM]