TAX-EXEMPT PLANS: Home Sweet (Tax-Free) Home: Parsonage and Retired Clergy

Members of the clergy often receive tax-free housing allowances from their congregations. These housing allowances traditionally were in the form of the sweet little Victorian house located next to the church (or synagogue, temple, or other place of worship), but in modern times it is more often a t...

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Bibliographic Details
Published inJournal of pension benefits Vol. 17; no. 1; p. 67
Main Author Klein, Amelia M
Format Journal Article
LanguageEnglish
Published New York Aspen Publishers, Inc 01.10.2009
Subjects
Clergy
Housing
Moving & housing expenses
Payments
Retirement
Retirement benefits
Self employment
Tax exemptions
United States > US
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Summary:Members of the clergy often receive tax-free housing allowances from their congregations. These housing allowances traditionally were in the form of the sweet little Victorian house located next to the church (or synagogue, temple, or other place of worship), but in modern times it is more often a tax-free payment to be used for housing expenses. Still, many clergy refer to the payments as parsonage. Parsonage payments may extend into retirement, and may, under certain circumstances, permit a portion of the clergy's retirement savings distributions to be received on a tax-free basis. This column explains how a housing allowance provided to a member of the clergy can impact retirement income. Although parsonage is not includible in income for federal income tax purposes, it may be considered compensation for purposes of determining retirement benefits under employees' pension plans and, to the extent applicable, self-employment income for purposes of the Self Employment Contributions Act prior to retirement.
ISSN:1069-4064