Since 1971, FCMM has provided a retirement plan 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 select any combination of FCMM-managed collective funds (Options C,D,E) or mutual funds (Options F,G,J). See Form 31 for a description of investment options.
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 Members in the Plan are allowed to defer a portion of their salaries. This is done through a Salary Deferral Arrangement (Form 03) whereby a certain amount is withheld from salary and sent by the employer to FCMM. These contributions can be pre-tax (tax-deferred) or Roth-designated amounts at the employee's choice. 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-designated 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 these articles for contribution limits: 2022 Contribution Limits, 2023 Contribution 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.
The participant can begin receiving monthly benefits from the FCMM Plan after age 59 ½. Distributions must begin at age 72. To begin receiving payments, 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.
Monthly Income Estimates
FCMM will prepare an individualized monthly income benefit estimate for participants upon request. Learn more about monthly income benefits or make a request for future 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 retirement income. The IRS requires a start date after age 59 ½ and before the end of the year you turn age 72.
- FCMM staff will respond with an estimated report.
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 ministers and missionaries is similar to what is currently practiced by a local church or mission board. However, the Member does not submit a housing allowance request; FCMM designates 100% of distributions as housing-allowance-eligible. The retired minister 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).
Distributions from housing-allowance-eligible-contributed funds in the Retirement Plan are designated by FCMM as 100% housing allowance eligible. The retired pastor must keep records of actual housing expense in order to document the amount of the annual payments that were actually used for housing expenses.
Any amount greater than either (1) those qualified housing expenses or (2) the fair rental value would be subject to income taxes.
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.
FCMM makes retirement investment counsel available 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.
Jeff Englin, formerly a wealth management consultant, serves as FCMM's Manager of Advisory Services. He 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 to schedule a phone appointment. He also attends the annual EFCA Theology Conference and the biennial EFCAOne Conference and offers individual appointments there.