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    Welcome to the eighth article in our enlightening series on the Minister’s Housing Allowance. So far, we’ve covered various aspects pertinent to active ministers. In this piece, we will explore how the housing allowance applies during retirement, a phase that brings its own set of rules and considerations.

    If you are still employed, please do not skip this article. There are some compelling tax strategies that you should know about. Often, following advice that works great for the general public will cause you to pay more taxes than you should. While our next article will break down how retired ministers’ housing allowance creates financial planning issues no one else deals with, this article will lay the groundwork for understanding why everyday financial advice may be bad for you.

    Eligibility in Retirement

    Retired ministers may continue to receive a housing allowance on portions of their retirement distributions from funds designated for this purpose. This unique provision reflects the ongoing recognition of a minister’s lifelong service. However, it’s crucial to understand how this works:

    1. Designation Before Retirement: To qualify for the housing allowance, retirement distributions must be from funds designated as a housing allowance by the church or organization before the minister retired.
    2. Distribution Source: Typically, these distributions come from a denominational pension plan or a 403(b)(9) retirement plan that the minister used during their active service.
      1. Most 403(b) accounts are not a 403(b)(9)

    Calculating the Allowance for Retired Ministers

    The calculation of the housing allowance for retired ministers follows similar principles as for active ministers, with the lowest of the following being non-taxable:

    • The amount is designated as the housing allowance.
    • Actual housing expenses.
    • The fair rental value of the home.

    Planning for Retirement

    Retired ministers and their churches should plan to ensure a seamless transition of the housing allowance from active service to retirement. This involves:

    • Ensuring that part of the retirement contributions are designated for housing allowance purposes.
    • Understanding the retirement plan’s rules regarding housing allowance designations.

    Pitfalls to Avoid

    1. Lack of Pre-Retirement Designation: Failing to designate retirement funds for the housing allowance before retirement can result in losing this benefit.
    2. Inaccurate Calculations: As with active ministers, retired ministers must accurately calculate and document their housing expenses.
    3. Doing an IRA Rollover: Processing a rollover from your 403(b)(9) will prevent you from being able to take housing allowance distributions in the future.  


    For retired ministers, the housing allowance continues to be a valuable benefit, offering financial relief in retirement years. Proper planning, understanding the rules, and accurate calculation remain as crucial as ever. As we continue our series, we’ll delve further into more specific scenarios and aspects of the Minister’s Housing Allowance, providing guidance and insights for ministers at all stages of their careers.

    For informational purposes only. It is important to consult a professional before implementing any strategies or ideas.