Frequently Asked Questions

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At Guardian Financial Group, it’s about transparency. So we’ve taken the time to compile some of our most frequently asked questions and provide the answers for you right here. Should you have any other questions, please feel free to reach out to us by giving us a call at (214) 501-1400 or by filling out the contact form here.

A 403(b)(9) is a defined contribution plan specifically designed for the unique needs of churches, church organizations or their missions. While similar to other 403(b) and 401(k) plans, 403(b)(9) plans are not subject to certain ERISA requirements, such as annual 5500 reporting. In addition, 403(b)(9) plans offer retired Ministers the ability to have retirement distributions designated as housing allowance.

A church should never ordain or license anyone to make that person eligible for a Minister’s housing allowance. Ordination or licensing clergy should be only for theological reasons, not for tax reasons. The IRS does not automatically consider someone a Minister for Tax Purposes simply because that person is ordained or licensed.

No. Churches cannot classify paid workers as independent contractors to “save money”; they must follow the law. Some Ministers may think they will save money on taxes if they treat themselves as self-employed for income tax purposes, rather than as an employee, but this is often not true.

Few churches qualify for an exemption from paying FICA for their non-Ministerial employees. Churches have one chance to gain exemption from paying FICA for their non- Ministerial employees and the churches taking this route must certify that they are opposed for religious reasons to making the payment for Social Security taxes. This is something that few, if any, churches can do. When a church elects to shift the burden of paying Social Security taxes to their employees, the employees must then pay SECA taxes as if they are self-employed.

The IRS can reclassify Ministers as employees for income tax purposes. Remember that employees may only deduct business expenses if they can itemize them. If the IRS reclassifies a Minister as an employee, the Minister may lose the business expense deduction and could also owe back taxes along with penalties and interest to the IRS.

This website and materials associated with it are designed to provide general information on the subjects covered.  Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement.  You are encouraged to consult your personal tax advisor or attorney.

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