AG Financial Solutions

As the endorsed retirement plan of The General Council of the Assemblies of God, MBA is authorized to declare a clergy housing allowance on distributions paid to retired ministers.

In order to have your distribution declared as clergy housing allowance by MBA, you are required to have made contributions to the MBA retirement plan from ministry-related sources during the time you were credentialed as a minister. You must also be retired at the time that the distribution is made.

There are limits to the maximum amount of clergy housing allowance that you can take.

See also:
What constitutes “retirement” for clergy housing allowance purposes?
What are the limits to the amount of clergy housing allowance that I can use?

As the endorsed retirement plan of The General Council of the Assemblies of God, MBA is authorized to declare a clergy housing allowance on distributions paid to retired ministers.

What constitutes “retirement” for purposes of these rules about SECA tax and the housing allowance depends on an individual’s particular facts and circumstances. Ministers with questions about whether they are “retired” for this purpose should consult their tax advisors. Ultimately, the minister must make this decision. Many facts and circumstances may be relevant in determining whether retirement has occurred. For example, if a minister is receiving retirement benefits from a plan and is making contributions to the same plan, the IRS may not consider that minister retired for purposes of the housing allowance and the favorable SECA tax treatment.

Similarly, the IRS may view ministers as not retired if they have not had a meaningful break in service or change in work duties. Additionally, the IRS may not view you as retired if you are age 70 1/2 or older and have filed the paperwork to delay a required minimum distribution from your retirement account.

Ministers and their tax advisors should work together to address the relevant facts and circumstances of each individual case.

A clergy housing allowance is exempt from federal income taxes to the extent that it is used to rent or otherwise provide a home. Common expenses that can be considered for the allowance include:

• Down payment on a home
• Mortgage or rent payments
• Real estate taxes and insurance
• Utilities (electricity, gas, water, trash services, local telephone charges)
• Furnishings and appliance purchases and repairs
• Structural repairs and improvements
• Yard maintenance and improvements
• Maintenance items (household cleaners, light bulbs, pest control)
• Home association dues

Items that are personal in nature cannot be considered for the allowance. Specific examples that are excluded are food and servants.

Additionally, the clergy housing allowance cannot exceed the lesser of 1) the amount declared by the payee as housing allowance, 2) the actual expense, 3) the fair rental value of the house as furnished plus utilities, or 4) the amount paid as housing allowance. As always, contact your tax or financial professional for advice on what should be considered as clergy housing allowance expense.

Credentialed clergy and formerly credentialed ministers may receive their distributions from MBA as clergy housing allowance to the extent that they received the contribution and related earnings on compensation related to ministerial duties. It does not matter if the credentials are AG or other church groups. Proof of credentials is required. No one may receive a housing allowance on inherited retirement accounts even if it was from a spouse who was credentialed.

No. The IRS allows a designated housing allowance on distributions from retirement to the individual who earned the compensation on which the retirement contribution was made.

If a credentialed spouse has ministry compensation, consider having your spouse open an MBA 403(b) account for him/herself. Also, consider designated Roth 403(b) contributions. A Roth style account will allow your spouse to have qualifying distributions that are not taxable after your death.