403-b

CONTRIBUTION LIMITS

 In the past there has been much debate over whether or not a minister’s housing allowance is to be included in income when figuring the 403-b contribution limits.  As of the 2002 tax year the voluntary contribution limit has increased to the smaller of:  1) 100% of income or 2) the amount from the table below.  As a result the argument over whether or not housing allowance is to be included in income is now a mute point.
 

                                                                                  Maximum Contribution
       Tax Year                Maximum Contribution           Age 50 or older

2006                                15,000                                  20,000

2007                                15,500                                  20,500

2008                                15,500                                  20,500

 There is also a catch-up provision for pastors who have been in the ministry for 15 years or longer.  An additional $15,000 can be contributed at a rate not to exceed $3,000 a year.  This would limit your yearly contributions to the smaller of:  1) 100% of your includible compensation or 2) the amount from the table below plus $3,000. 

You may wish to refer to IRS Publication 571 and IRS Publication 4406 for additional information regarding contribution limits and for general information regarding the 403(b).

 Note:  If you use 100% of your ministerial income as housing and the church makes contributions to your 403-b instead of using voluntary salary reduction, please call our office for counsel.