Question:
When a church contributes a nonelective contribution (see definition at http://www.irs.gov/publications/p571/ch01.html) each month to a pastor's 403(b) account that is not tied to the salary and is not Roth related, how is it reported on a W-2?
Answer:
As long as the contributions are made in accordance with a qualified plan (the investment firm can tell you whether the plan is set up to receive employer contributions of this nature), then there is no Form W-2 disclosure other than to check the "Retirement" box indicating that he has an employer plan.
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2 comments:
What would be the reporting rule if the church wrote the check directly to the minister rather than to a financial institution?
Writing the check directly to the pastor results in taxable income reportable as Compensation in Box 1 of Form W-2.
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