Since 1971, FCMM has provided retirement plans for EFCA pastors, staff, and missionaries. With our 403(b)(9) church retirement income account plan, we offer a variety of investment options, whereby participants can manage their own account or participate in FCMM-managed funds.
How Contributions Work
By law, all funds to be invested in a participant’s account must be submitted by an employer. The amounts sent may consist of contributions by the employer and/or the employee.
Employer contributions are considered “tax deferred” and do not appear on an employee’s Form W-2. Such contributions become subject to taxes when an individual begins to draw on his or her Plan account at retirement, unless eligible for exclusion as a “housing allowance.” Employer contributions can be invested in all available investment options.
All participants in the Plan are allowed to defer a portion of their salaries. This is done through a Salary Deferral Arrangement whereby a certain amount is withheld from salary and sent by the employer to FCMM. This money can be treated as tax-deferred or as a Roth contribution. Employee contributions can be invested in all available investment options.
Clergy do not have to pay either income or social security taxes (SECA) on a tax-deferred contribution and can receive distributions from the Plan designated as “housing allowance” in retirement. Lay staff participants do not have to pay income taxes on tax-deferred salary deferrals. Such amounts will be taxed when distributed from the Plan. Lay staff members do pay FICA taxes on these funds.
Employees may designate some, or all, of their salary deferral contributions as Roth contributions. Roth contributions are taxed when deferred to the Plan, but such amounts and earnings are distributed tax-free at retirement (or upon an earlier distribution event) if the contributions have remained in the Plan for at least five years and the participant is at least 59 ½.
IRS Code Sections 402(g) and 415(c) Contribution Limits
Contribution limits are established by the IRS. See this page for current limits. If you are close to the limits, please call us for help in figuring out your limit. The limits apply to the total of all contributions to all 403(b) plans in which you participate and are adjusted annually by the IRS.
Receiving Retirement Benefits
The participant can begin receiving benefits from the FCMM Plan after age 59 ½ and before age 70 ½. To begin receiving an annuity payment, notify us at least two full months prior to your desired starting date. We'll then prepare the necessary paperwork. Payments are sent electronically to your personal bank. Learn more about receiving benefits.
FCMM will prepare an individualized annuity estimate for participants upon request. Learn more about annuities or make a request for future annuity estimates by sending an email to email@example.com with the following information:
- A starting date(s) or age(s) at which you are thinking of beginning a retirement annuity. The IRS requires a start date after age 59 ½ and before age 70 ½.
- Any future contribution amounts you would like figured into the estimate. FCMM staff will provide estimates as workload allows.
Housing Allowance Benefit for Credentialed Clergy
One of the significant advantages of a 403(b)(9) church plan like the one FCMM offers is the opportunity for all credentialed staff members (ordained, licensed, commissioned) to receive the clergy housing allowance tax benefit throughout retirement.
A common question often arises: “How can I get ‘housing allowance’ when I am no longer employed by a local church or serving in the mission field?” The IRS considers all retirement benefits as “deferred income.” Thus, if contributions were made to your retirement account through FCMM when you qualified for the clergy housing tax benefit, then you also qualify for the tax advantage to apply to your retirement benefits, even though you may no longer be serving in a full-time ministry position.
FCMM’s procedure for all retired pastors and missionaries is similar to what is currently practiced by a local church or mission board. The retired pastor must keep his actual housing expense records in order to justify the amount of the annual FCMM benefit that actually went to housing expenses. Any amount above those qualified housing expenses or above the fair rental value of the property, whichever is lower, would be subject to income taxes.
Typical expenses that qualify to be included in the allowance are rent or mortgage payments, utilities, property taxes, household repairs, yard care, and furniture. The tax code clarifies that the housing allowance for ministers who own their home is limited to the annual fair rental value of the home (furnished, plus utilities).
If a participant also receives a housing allowance given by a church or employer, the combined total of housing allowance from employer and from FCMM retirement benefits must not exceed actual housing-related expenses or the fair rental value of the home.
Any excess at the end of the year must be reported on your individual Federal Tax form as “other income.”
Local churches and ministries should follow “best practices” to correctly identify those who meet the IRS regulations in order to qualify for the clergy housing allowance tax benefit.
Since 2008, FCMM has partnered with the Alliance Benefit Group (ABG) Financial Services to provide participants professional retirement investment counsel at no charge. We encourage pastors and other staff members to seek the advice of an objective, trained financial counselor who can provide guided assistance in the area of personal stewardship matters including retirement planning.
Effective April 2016, FCMM has employed Jeff Englin, formerly a wealth management consultant with ABG, to give full-time service to FCMM Retirement Plan participants. Jeff can provide assistance in determining which investment options may best fit a participant's goals. He is familiar with all of our investment options and can give special assistance in selecting specific American Funds and Biblically Responsible funds. Contact Jeff at firstname.lastname@example.org or 952.853.1751.