Benefits of 403(b)(9) Retirement Plans for Churches or Church-Related Organizations

Are you a pastor, administrator, or church board member trying to figure out how to offer a retirement plan for your team?

If so, you’ve probably asked some of these questions:

• What are the best church retirement plans for small congregations?

• Which companies offer retirement plans tailored for church employees?

• What options do churches commonly offer to staff?

• Is there a plan that supports both pastors and non-minister employees?

Many ministry leaders across the country are navigating these same challenges, looking for ways to provide meaningful benefits without adding complexity or breaking the budget.

That’s exactly why the 403(b)(9) church retirement plan exists. It was specifically created for churches and faith-based organizations like yours, offering a combination of flexibility, tax advantages, and simplicity that other retirement plans simply can’t match.

Let’s look at why the 403b9 plan is often the best choice for ministries of all sizes.

What Is a 403(b)(9) Retirement Plan?

A 403(b)(9) retirement plan is designed for the distinct needs of churches or those with 501(c)(3) church status. This plan provides many benefits for churches and is an option that most churches should not pass up.

To qualify, your organization must have 501(c)(3) church status and, in most cases, receive a determination letter from the IRS confirming that designation.

Who Can Participate in a 403(b)(9) Retirement Plan?

One of the most appreciated features of a 403(b)(9) plan is flexibility.

That’s right, employers can decide which employees are eligible to participate in the plan.

This means your leadership team can decide things like:

• Minimum age or service requirements before participation
• Whether part-time or seasonal employees can join
• Whether the plan is open to ministry staff only, or all employees

This gives your church the ability to create a plan that fits your specific structure and budget — not a one-size-fits-all approach.

403(b)(9) Plans and ERISA Regulations

403(b)(9) retirement plans are non-ERISA, meaning that they do not fall under the Employee Retirement Income Security Act (ERISA) regulations.

ERISA regulations require tax-deferred retirement accounts to comply with periodic reviews and discrimination testing. Because a 403(b)(9) plan does not fall under ERISA regulations, it is less expensive to administer and requires fewer form preparations and testing requirements—saving time and costs.

Unlike a non-ERISA 403(b) plan, where employers cannot contribute to a plan, employers of non-ERISA 403(b)(9) plans can contribute to the plan.

403(b)(9) Plans and Tax-Savings Benefits

One of the biggest benefits of 403(b)(9) retirement plans are the specific opportunities for tax savings.

Housing Allowance is a big tax-savings benefit for ministers who are ordained, licensed, or commissioned. It gives them the ability to receive part of their salary for housing allowance purposes, which is excluded from gross income and not subject to federal income tax.

When ministers retire, they can take part of their distribution in the amount of the housing allowance without paying taxes on that money.

For Social Security purposes, a minister is considered self-employed. This means that they are responsible for Social Security Self-Employment taxes (SECA). But a big tax savings benefit is that contributions are made pre-SECA tax (for those who have not opted out of Social Security). This is almost a 15 percent tax savings benefit.

Why a 403(b)(9) Retirement Plan is Ideal for Churches

Let’s quickly recap some of the biggest advantages that set 403(b)(9) plans apart from traditional 401(k) or 403(b) plans.

1. Flexibility for Employers

Your church maintains control over eligibility, contribution levels, and plan design — allowing you to care for your people in the way that best fits your mission and resources.

2. Housing Allowance = Significant Tax Savings

Ministers can exclude their housing allowance from taxable income, both during active ministry and in retirement. That means your pastor’s retirement withdrawals can still be designated as housing allowance — often saving thousands in taxes each year.

3. Lower Costs and Less Red Tape

Most 403(b)(9) plans are non-ERISA, meaning they’re not subject to the complex and expensive regulations that govern corporate plans. That translates to:

• No annual Form 5500 filing
• No costly independent audits
• Fewer administrative burdens

In other words, your team can spend less time on paperwork and more time on ministry.

4. Additional Tax Savings for Ministers

Contributions to a 403(b)(9) plan are not subject to SECA taxes (the self-employment tax for ministers), which can mean an additional 15% tax savings each year.

5. A Dedicated Team That Understands the Needs of Churches

At TruthPoint Financial, our mission is not only to make sure you’re educated on your retirement plan options but to also give ministries and non-profits retirement plan solutions that they deserve — simple, transparent plans at the lowest possible fees and ongoing dedicated service to every single person.

Give us a call today so that we can talk about your 403(b)(9) retirement plan options.