Discussion:SEP for Clergy

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Discussion Forum Index --> Advanced Tax Questions --> SEP for Clergy
Discussion Forum Index --> Tax Questions --> SEP for Clergy

Sl130 (talk|edits) said:

31 January 2008
I am trying to help a member of the clergy switch to a cheaper retirement plan and the IRS guidance seems a little bit unclear to me. Two questions specifically:

1) It seems that clergy is a bit of a gray area concerning self-employed vs. employee. Can the pastor set up a SEP IRA as a self-employed person?

2) If not, then he is the only "employee" of the church. I would like the church to set up the plan on his behalf. It appears that non-profits can establish SEPs and Simple IRAs. Can anyone confirm or deny this?

Any help is appreciated, thanks.

Steve

Taocpa (talk|edits) said:

31 January 2008
Please fill out your profile, first. Then we can "steer" you in the right direction.

Tom

Jctmstx (talk|edits) said:

31 January 2008
If he files a schedule C yes as self employed.

If he's an employee then yes do it that way. So your correct on both counts. So the question? Is he an employee of self-employed. Look at how he's paid.

Death&Taxes (talk|edits) said:

31 January 2008
But most clergy receive wages, even though they pay their own SE tax.

JR1 (talk|edits) said:

January 31, 2008
He should be both. Dual status.

Taocpa (talk|edits) said:

31 January 2008
All my clergy receive both and are part of a 403(b). But then again, they are Catholic priests.

Tom

Sl130 (talk|edits) said:

4 February 2008
Thanks for the input. The fact that most clergy participate in some type of denominational plan where the church mails off the check would lead me to believe it is better for the employer to establish the SEP.

Steve

Nkoum (talk|edits) said:

5 February 2008
You can request an exemption from SE tax if you are one of the following.

• A minister. • A member of a religious order who has not taken a vow of poverty. • A Christian Science practitioner. • A member of a recognized religious sect.



To claim the exemption from SE tax, you must meet all of the following conditions. • You file Form 4361, described later under Requesting exemption—Form 4361. • You are conscientiously opposed to public insurance because of your individual religious considerations (not because of your general conscience), or you are opposed because of the principles of your religious denomination. • You file for other than economic reasons. • You inform the ordaining, commissioning, or licensing body of your church or order that you are opposed to public insurance if you are a minister or a member of a religious order (other than a vow-of-poverty member). This requirement does not apply to Christian Science practitioners. • You establish that the organization that ordained, commissioned, or licensed you, or your religious order, is a tax-exempt religious organization. • You establish that the organization is a church or a convention or association of churches. • You did not make an election discussed earlier under Who cannot be exempt. • You sign and return the statement the IRS mails to you to certify that you are requesting an exemption based on the grounds listed on the statement. Requesting exemption—Form 4361. To request exemption from SE tax, file Form 4361 in triplicate (original and two copies) with the IRS.

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