Introduction
Preparing for the future is a priority for The A.M.E. Zion Church and for each of us individually. Realizing that our time of “retirement” may last for 30 years, it is important for us to be prepared financially for that length of time. Saving is hard for all of us so starting as early as we can and putting aside as much as we can is critical for our family. Working together, we can prepare more efficiently than doing it alone.
Each church has a responsibility to support its pastor and staff in this effort. Each pastor and staff member has a responsibility to actively engage in this effort. Together we will make a difference. In order to create a better Retirement Plan, we reached out for specialists to help us. The result is The A.M.E. Zion Church 403(b)(9) Retirement Plan. The information that follows outlines the plan and its significant benefits.
You will be pleased with the investments, the safety of those investments, and the support available from the experienced, faith-based staff at Envoy Financial. As a body, we are committed to each other. The ability to prepare for a lifetime of ministry will strengthen the body, take care of our families, and continue to build the kingdom.
Housing Allowance
The Minister’s Housing Allowance is one of the greatest tax benefits available to ministers. As an ordained, licensed, or commissioned minister, you can receive a portion of your compensation as Housing Allowance. That portion is excluded from your gross income and therefore not subject to federal income tax. This represents substantial tax savings for you.
Further, when you retire as an ordained, licensed, or commissioned minister, a portion of your 403(b)(9) retirement plan distribution can be taken as Housing Allowance, providing additional tax savings in retirement. To retain the benefit upon retirement, do not transfer any of these funds to an IRA. This unique benefit enhances the A.M.E. Zion Church Retirement Plan.
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Plan Oversight
The A.M.E. Zion Church Retirement Plan Oversight Committee (RPOC) is responsible for all actions and decisions concerning The A.M.E. Zion Church Retirement Plan administered by Envoy Financial. Each quarter the RPOC meets to review the plan, its investments, and associated services.
The primary purpose of your RPOC is to not only provide legal protection for the denomination but also to increase the value of your church’s investment in the plan. Good stewardship of the plan through wise oversight and engagement results in increased preparedness, greater understanding, successful retirement, and higher value.
The Importance Of Getting Started
Without the proper motivation, opportunity, and support, many will never start or maintain a retirement account. A bolder perspective on retirement can offer greater purpose, excitement, and impact during your last quarter. For most, “retirement” is when you cease working and focus on yourself. However, God never calls us to stop loving and serving others. In fact, retirement can provide you with more time and financial freedom to serve God in new ways. The A.M.E. Zion Church Retirement Plan offers tools and encouragement to help you both envision and fulfill the future God has chosen for you
Preparation & Support
Will you have enough? It all depends on what you do now. Preparation is a process and not just an investment. The A.M.E. Zion Church Retirement Plan’s easy enrollment, ondemand education, equipping resources, and interactive evaluation tools provide the investment knowledge and confidence you need. Once enrolled, you can review and make changes to your account 24/7.
The A.M.E. Zion Retirement Plan offers priority customer service through Envoy Financial’s one-on-one support. Your questions will be answered by friendly, faith-based professionals on the first call. In addition, you can use online customer service chat and access the convenient online help center 24/7
Investments
Everyone has the opportunity to invest well. The A.M.E. Zion Church’s Retirement Plan uses open architecture and a unique menu creation/selection process to create and maintain your investment menu. Investment selection is made easy. You have the option to choose your investments or to be guided by an exclusive investment analyzer. Your investment menu is reviewed quarterly by The A.M.E. Zion Church RPOC.
Retirement For Your Church Staff
Under The A.M.E. Zion Church Retirement Plan, you are encouraged to include your church staff. The church may make a contribution to the plan, or it can be 100% voluntary. The administration effort is small and the rewards are great. In addition, rollovers and transfers into the plan from a IRA, 403(b), or 401(k) are accepted and encouraged.
Housing Allowance At Retirement
The Minister’s Housing Allowance is one of the greatest tax benefits available to ministers and comes from Section 107 of the Internal Revenue Code. When an ordained, licensed, or commissioned minister receives a portion of their compensation as housing allowance, that portion is excluded from gross income and therefore not subject to federal income tax. This can represent substantial tax savings for the minister. Further, when a minister retires, a portion of their 403(b)(9) retirement plan distribution can be received as housing allowance, providing additional tax savings in retirement.
The minister receiving the housing allowance must determine their eligibility, understand the limits, and follow the rules. They must keep records to substantiate the amount they include when calculating housing expenses.
Eligible expenses include mortgage payments (principal and interest); rent payments; real estate taxes; property insurance; utilities (gas, electricity, water, sewer, garbage pickup, local telephone service); appliances and furniture (purchase or rental cost and repairs); remodeling expenses; homeowners’ dues; and pest control. The housing allowance may not exceed the lesser of 100% of compensation or actual housing expenses. A housing allowance must be board-approved and designated in writing by the organization before the beginning of the calendar year. It cannot be designated retroactively, meaning it must be established before the minister earns the income on which the organization designates the housing allowance.
Monies Contributed By You And Your Church
Every A.M.E. Zion Church is expected to contribute to the Basic Program. Each church’s individual pastor/staff will determine if they desire to contribute more as part of the Choice Program. Your church may contribute an additional amount. Eligible participants may also make contributions on a voluntary basis. The current limit for those contributions in 2023 are $22,500 for those under 50 and $30,000 for those over 50. Please check with Envoy Financial or your tax advisor to determine your exact eligibility.
Calculating Your Retirement Savings
As you plan for retirement, you will want to estimate and review your projected income annually. The income will reflect the results of up to three components added together:
The A.M.E. Zion Church Retirement $ ____________
Other Retirement Savings $ ____________
Other Investments $ ____________
TOTAL RETIREMENT $ ____________