FAQ
Taxes
As a minister, do I pay SECA (Social Security and Medicare) taxes on a distribution from my 403(b) retirement account?
Retired ministers may be eligible to receive favorable SECA tax treatment on their benefits designated as housing allowance by MBA. In other words, “retired” ministers may not have to pay SECA taxes on their distributions paid from their 403(b) account.
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.
See also:
What constitutes “retirement” for clergy housing allowance purposes?
As a lay employee, do I pay FICA (Social Security and Medicare taxes) on a distribution from my 403(b) retirement account?
No. FICA taxes are not due on any retirement distributions.