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Roth IRA Contributions Paid by Church to Pastor's Account

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Question:

I realize that an employer cannot make contributions to a Roth IRA; only the owner (pastor) can. However, can the church deduct an amount from the pastor's pay and make the IRA payment directly to the bank or company that administers the pastor's Roth IRA account? (Realizing that the contribution has to be added to the Pastor's gross income reportable on Form W-2.)

Answer:

Yes. This facilitation is permissible; essentially, it's no different than withholding from the pastor for any other "convenience" payment that is not a statutory / tax-free benefit. The same conditions apply relative to contributions to a Traditional IRA account on behalf of the pastor.
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Comments

  1. cterryMarch 11, 2013 at 10:23 PM

    What is the benefit to doing it as you mentioned? As opposed to the pastor simply paying into the Roth IRA himself? Thank you for your time.

    ReplyDelete
  2. Corey PfaffeMarch 14, 2013 at 12:03 PM

    The only benefit is the convenience to the pastor. For many of us, "out of sight, out of mind."

    Letting the church withhold and submit the contribution eliminates the pastor's attention to it each month.

    ReplyDelete
  3. Ben VitoDecember 27, 2016 at 3:50 PM

    will this go on the pastor's W-2?

    ReplyDelete
    Replies
    1. AnonymousJanuary 17, 2017 at 1:14 PM

      Yes, the contribution will be reported on Form W-2. See above blog, "(Realizing that the contribution has to be added to the Pastor's gross income reportable on Form W-2.)"

      Delete

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