Church accounting for contribution paid to pastors retirement fund

by Glenda
(Detroit MI, USA)

How should you treat a board approved amount of funds to be given to the pastor?

The church does not have an existing plan, but will give pastor a certain amount of funds to deposit into their personal retirement account.

Should this be reported on W-2 or it is treated the same as housing allowance? Thank you

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Taxable Income
by: Vickey

It is taxable income, so it must be reported in Box 1 of their W-2.

If the church had set up a qualifying retirement account and contributed to it for their employees...it would be nontaxable...but giving the money directly to the employee...makes it taxable.

Now, you can set up and approve a housing allowance and those monies would NOT be considered TAXABLE income and would be reported in BOX 14 on the W-2.

However, you should share with your pastor what is considered eligible housing expenses: https://www.freechurchaccounting.com/housingallowance.html

Payments to a retirement are NOT an eligible housing expense...but it can be a tax deduction on a personal tax return =)

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