June 27, 2016

Shopping for 403(b) Plans

Question: 

Some financial advisors have communicated that Internal Revenue Code Section 403(b) retirement plans sold by them are “uniquely able to provide tax-free withdrawals (as housing allowance) upon retirement for clergy.” Is tax-free treatment only available through specialized financial advisors selling 403(b) plans?


Answer:

IRC Section 403(b) plans are designed for tax exempt entities that wish to enjoy the benefits offered to businesses by similarly provisioned IRC 401(k) plans. When adopted by churches as their employee benefit plans, they are eligible for significant advantages to ministers including potential tax-free treatment upon retirement. This is true regardless of the investment plan administrator. Churches may contact investment advisors in their communities to determine whether they also can assist in establishing 403(b) plans. 

Please follow these links to past posts concerning this topic:

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