Designating a Housing Allowance from a 403-b
If your 403b is with a religious annuity board like GuideStone Financial Services or Envoy Financial, they will designate your housing allowance for you. If your 403b is with a secular investment agency such as Vanguard, Fidelity, TD Ameritrade, etc. then include the following in the business meeting minutes of the church or board:
According to the provision in income tax law, a retired minister of the Gospel is not subject to federal income tax on ministerial retirement distributions designated as housing allowance to the extent that it is used to provide a home.
Resolved that Pastor ____________ is to receive 403-b distributions for the year 20___. 100% of this amount is hereby designated as housing allowance.
Resolved that as long as Pastor ____________ is receiving 403-b distributions 100% of these distributions will be designated housing allowance for all future years until modified.
Date_______________
Signature_________________________
The names of the individuals making the motion and seconding it should be included. You can designate 100% of the distributions as housing allowance, but the housing allowance is always limited to out-of-pocket costs in providing a home. The housing allowance designation should be renewed in writing each year.
Note: For IRS documentation regarding designating a portion of a minister’s pension as housing allowance refer to IRS Publication 517 (page 9, “Retired Ministers”).