Housing Allowance in Retirement

When a minister invests in a 403(b)(9) church plan throughout their career, they have the ability to continue receiving a tax-free housing allowance through their retirement account when they retire.

Revenue Ruling 75-22 allows denominational pension boards such as Church Benefits Board (CBB), a 403(b)(9) church plan, to designate a housing allowance for retired ministers receiving income. Retired ministers may ask CBB to designate up to 100% of their retirement income as housing.

Many individuals who are approaching retirement have questions about how their housing allowance benefit will continue into this next season. The information below is a helpful guide as you move into this next chapter of life and ministry.

Claiming a Housing Allowance in Retirement

When you’re ready to receive your first housing allowance distribution, you will complete the Housing Allowance Withdrawal Request form located on your Empower account online under “Plan Forms”. You can also reach out to the Church Benefits Board staff to obtain the PDF and walk through how to complete pages 1-4 of the form.

There are two types of payment schedules for your housing allowance distributions:

• One-Time Withdrawal: A one-time payment to you when your form is submitted.
• Periodic Installment Payments: Setting up a consistent payment schedule for the same amount each time. You can set this up as monthly, quarterly, semi-annually (twice per year) or annually.

You get to decide which type of payment schedule works best for you.

NOTE: Periodic Installment Payments can be changed after they are in place. To change the amount or date of your periodic installment payment, you would simply complete a new Housing Allowance Withdrawal Form, and in Section C on page 2, indicate you are making a change to an existing Periodic Installment Payment.

Submitting Your Housing Allowance Form

The fastest and most secure way to submit your housing allowance form is through your Empower account online. You will choose “Upload Forms” and select “Transaction Documentation” to submit to Empower.

Once submitted, the form goes to Empower for initial processing and then it is sent to CBB for final signature and approval. This allows our team to certify and approve the transaction as housing allowance.

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Frequently Asked Questions

How do I determine the amount of my housing allowance in retirement?

The same way you determined your housing allowance when you were working.  

If a housing allowance is properly designated in advance, a minister can exclude the lowest of the following three amounts from income for federal tax purposes: 

• The total housing allowance designated by their church (or Church Benefits Board for retirees) 
• The fair market rental value of your furnished home, including utilities  
• Actual housing expenses (including mortgage payments, utilities, insurance, improvements, furnishings, etc.)

Now that I am retired, can I continue to contribute to my retirement account?

If you are a self-employed minister and receive 1099 income from ministerial work, we can set your account up so you can continue to contribute to your account. However, if you are contributing to your account, you cannot begin claiming a housing allowance from your retirement.

Is it possible to receive my housing allowance payment as ACH or direct deposit?

Yes! To receive your distributions as ACH, it is important that you log into your Empower account and add the bank account you would like to have these funds deposited into. Bank accounts added to your portal may have a 15-day verification period before a payment can be made, so it is important this is done as soon as possible to ensure everything is in place when you are ready to request your first distribution. Follow these steps to add your bank account online:

Will I receive tax documentation from CBB to submit with my taxes to claim my distributions as housing allowance?

Yes. Empower will mail you a 1099-R which will reflect the amount you withdrew for housing allowance.

Box 2b “Taxable Amount not Determined” will be checked. This indicates no taxes were withheld, and you can claim this as housing allowance when you file your taxes.

NOTE: If you also withdrawal taxable distributions in addition to housing allowance distributions from your retirement account, you will receive two 1099-R statements. One for your taxable distributions and one for your housing allowance distributions.

Will taxes be withheld from my housing allowance distribution?

If you use the Housing Allowance Withdrawal Request form, federal and state taxes will not be withheld.

NOTE: It is important that you mark the boxes on page 3 of the Housing Allowance Withdrawal form that confirms you do not want to have federal or state taxes withheld.

If you have questions about how to complete this page, please contact Church Benefits Board.

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