wfn.org | Pension Housing Allowance

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"UNITED METHODIST DAILY NEWS" by SUSAN PEEK on Aug. 11, 1991 at 13:58 Eastern,
about FULL TEXT RELEASES FROM UNITED METHODIST NEWS SERVICE (3143 notes).

Note 3139 by UMNS on Aug. 27, 1996 at 16:32 Eastern (2448 characters).

SEARCH: Minimum Wage Bill, SECA tax, self-employment tax, housing
allowance, 403(b), 401(k)

Produced by United Methodist News Service, official news agency of
the United Methodist Church, with offices in Nashville, Tenn., New
York, and Washington.

CONTACT:  Ralph E. Baker                          425(10-71){3139}
          Nashville, Tenn. (615) 742-5470            Aug. 27, 1996

'Minimum Wage Bill' protects pension
housing allowance from SECA tax

by Kenneth Lambert*

     EVANSTON, Ill. (UMNS) -- When President Clinton signed the
Small Business Job Protection Bill of 1996, commonly called "the
minimum wage bill," into law Aug. 20, it included a provision
protecting portions of ministerial pensions designated as housing
allowance from the SECA tax.
     At the request of the Church Alliance, a coalition of church
benefit boards -- including the United Methodist Board of Pension
and Health Benefits here -- the provision was added to the minimum
wage bill assuring that pension benefits taken as housing
allowance are not subject to self-employment (SECA) tax.
     The provision was made effective retroactively to Dec. 31,
1994.
     Barbara Boigegrain, top staff executive of the United
Methodist pension board, said that members of Congress added this
provision to the bill for clarification because more than 50,000
clergy from the United Methodist Church and other denominations
wrote letters to members of Congress and the President concerning
the matter.
     The clarification was sought after the Internal Revenue
Service (IRS) began to move away from a 30-year understanding that
pension benefits taken as housing allowance are not subject to the
SECA tax. In 1995 IRS issued audit guidelines to its field agents
suggesting that retired ministers who exclude a portion of their
retirement benefit as a housing allowance exclusion would need to
pay the SECA tax on the excluded portion.
     The Small Business Job Protection Bill also provides for 403
(b) salary reduction agreements to comply with the more liberal
rules for 401(k) agreements. The new provision allows 403(b)
participants to execute more than one prospective salary reduction
agreement a year. Retirement programs administered by the board
are 403(b) programs.
                              #  #  #

     * Lambert is a communication specialist for the United
Methodist General Board of Pension and Health Benefits.

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