Church retirement plan
If you work for a church, your church retirement plan may be a 403(b), and there's a version built just for churches, the 403(b)(9). Here's who can join, how much you can save in 2026, and how a pastor's housing allowance can follow them into retirement.
How does a 403(b) work for a church?
A 403(b) is a retirement account offered by tax-exempt employers. Allowable contributions can be kept out of your taxable wages, with tax paid when you withdraw the money. To offer one, your church must hold 501(c)(3) tax status.
There are 3 types, and they mainly differ in where the money sits:
- 403(b)(1): the money goes only into annuity contracts
- 403(b)(7): held in a custodial account that buys mutual funds
- 403(b)(9): the version designed for churches
The 403(b)(9) goes by the name retirement income account. It provides tax-deferred retirement accounts for people working at churches and some church-connected groups. The plan has to follow a written plan document, which means your church must have that document ready.
According to GuideStone, a 403(b)(9) plan is exempt from deferral and top-heavy testing. For employees, a more important question is whether the plan has elected coverage under the federal retirement-plan law known as ERISA. Rather than create a plan from scratch, many churches sign onto one managed by a denominational benefits board. More than 23,000 churches and ministries work with GuideStone, while the Episcopal Church Pension Group serves the ministers and employees of The Episcopal Church.
Can a pastor use a 403(b)?
Yes. Ministers serving as ministers or chaplains, along with other church employees, are usually eligible to join 403(b) plans. That covers the pastor, and also staff like your secretary or music leader.
When someone is an employee, the church can keep allowable contributions out of income, so those amounts never appear in W-2 wages. Tax comes due later, at payout time. A minister who is self-employed is treated as employee and employer at once, and may contribute to a retirement income account on their own behalf.
2026 contribution limits
Here is the most someone can defer from their own pay in 2026, per the IRS. A catch-up contribution means extra room granted once you reach a given age.
| Age during 2026 | Standard limit | Catch-up | Yearly total |
|---|---|---|---|
| Under age 50 | $24,500 | $0 | $24,500 |
| 50 or older, except 60 through 63 | $24,500 | $8,000 | $32,500 |
| 60 through 63 | $24,500 | $11,250 | $35,750 |
For 2025, the regular limit stood at $23,500. Everything that goes into your 403(b) accounts in a year, from you and the church together, can't be more than $72,000 or your full includible pay, whichever is lower.
A pair of special rules can lift the limits for church workers with long service or lower pay:
- Once someone has spent 15 years or more with the same church, their annual limit may go up by as much as $3,000, capped at $15,000 across their lifetime.
- A church employee may elect $10,000 a year as their overall limit even if the standard formula allows less, with a $40,000 lifetime ceiling.
Pastor housing allowance in retirement
Retired ministers may exclude from taxable income the portion of a church pension designated as a rental allowance. When a church provides a home in return for past service, that home's rental value is excluded as well.
The Labor Department points out that this exclusion can extend to 403(b)(9) payouts for clergy who have retired. According to GuideStone, pension boards like GuideStone may designate a housing allowance for retired ministers receiving 403(b) income, though not for money pulled from an IRA. Rolling church funds into an IRA can therefore cost you the allowance on that money.
The tax-free amount equals the smallest of 3 figures: the amount designated, the actual housing costs, and what the home would rent for with utilities. Here are two examples:
| Amount designated | Housing costs | What the home would rent for, utilities included | Not taxed | Taxed |
|---|---|---|---|---|
| $20,000 | $18,500 | $24,000 | $18,500 | $1,500 |
| $24,000 | $26,000 | $22,000 | $22,000 | $2,000 |
Other retirement options for churches
Only employers with 100 or fewer employees can offer a SIMPLE IRA. The church has to either match staff contributions or contribute a set percentage of pay.
Plans created on or after December 29, 2022 normally have to enroll workers automatically, but church plans are excused from that rule.
Questions churches often ask
Must a church retirement plan follow ERISA?
No, unless the church elects coverage. ERISA is the main federal law governing retirement plans at work, and church plans sit outside Title I plus certain tax code rules. A church may elect to be covered.
Do church 403(b) contributions face self-employment tax?
No. Money a minister puts into a church 403(b), salary deferrals included, does not count toward self-employment earnings. Pension payments received later on are excluded as well.
Is a church pension protected if the money runs out?
Not necessarily. As the Pension Rights Center cautions, church pension plans aren't required to carry federal pension insurance, which means payments might end if the money runs dry.
Must high earners make catch-up contributions as Roth?
Starting in 2026, yes, if the plan has a Roth option and your pay from that church was over $150,000 the prior year. With Roth, tax is paid on the way in instead of on the way out.