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Retirement Plans

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I have been pastoring for about eight years and as of yet have not set up any type of retirement plan for myself. I understand that the church can fund certain type plans or I can wait until I retire and the church can set up some type of self-funded retirement plan.  Do you have any suggestions?

First of all, don’t put off what you need to do today. It is my experience that the self-funded retirement plans are not adequate and usually do not last. When a church sets up this type plan, there are no guarantees it will continue through retirement. In fact, with what I have seen, these type plans usually last only about 36 months, and then the retired pastor is left with nothing for the remainder of his retired future.

My recommendation is to get started now in a qualified retirement plan that can be funded by the church with no tax consequences when the money is put into the fund. While there are many type plans available, for ministers the best is to establish a 403(b) plan. Under this qualified plan, the money is set aside for the minister by the church. The money will grow tax deferred and at retirement it will be available for the minister to utilize. The retired minister will not have to worry about his financial future if he has set up the plan properly and invests it wisely.

There are great benefits when receiving the funds at retirement. In most cases, at retirement, the minister can draw out his retirement funds as a qualified housing allowance and no taxes will be paid on the amount taken as housing. I call this a full tax free plan . . . no taxes when the money is contributed by the church, and no taxes when the money is received as housing at retirement age.

My recommendation is simply to contact someone about a 403(b) plan (such as the Ministerial Retirement Plan offered by the United Pentecostal Church Intl.) and get started immediately. The continual growth of the funds will amaze you, and you will be blessed with a worry-free future concerning your finances.

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