MinistryCPA - Corey A. Pfaffe, CPA, LLC

Question: A church is considering adopting a simple cafeteria plan in order to provide its pastor and other employees a choice between two benefits. What requirements must be met for the church to be eligible to establish a simple cafeteria plan?  Answer: Section 125 Plans, often referred to as Cafeteria plans, allow employers to offer employees certain benefits on a pretax basis. In most cases, participants in a cafeteria plan must be permitted to choose from at least one taxable benefit (i.e. cash) and one qualified nontaxable benefit such as health plans, group term life insurance, and others described in IRS Publication 15-B .  In order to be Section 125 compliant, the employer must retain written documentation of the plan and meet various requirements described in Internal Revenue Code (IRC) Section 125. One common type of Section 125 plan is a Premium-Only Plan (POP). POP's allow employers to withhold and remit each employee's portion of health insurance premiums pre-ta...

  Highlights of Consolidated Appropriations Act (CAA) of 2021 applied to Churches and Christian Ministries February 2021 While the actual CAA is 5,593 pages long, the following summary highlights portions of this latest coronavirus related legislation specifically of interest to churches and Christian ministries. We have listed them in the order that we believe will most impact ministries. We certainly advise readers to consult us for details of these provisions and the myriad other components of the law. With the new Administration in Washington additional legislation is inevitable and may modify these benefits. PPP2 loans and forgiveness A second wave of Paycheck Protection Loans and forgiveness is available for eligible not-for-profit organizations. The primary eligibility criteria requires that at least one 2020 quarter’s gross receipts were at least 25% less than the same quarter in 2019. Similar to PPP1, the loan amount is 2.5 times the average total monthly payme...

Here at MinistryCPA, we recognize that many churches rely on volunteers and/or part-time treasurers and financial secretaries.  With this in mind, we seek to come alongside ministries in providing the much-needed support to ensure that they are operating in a manner that is both compliant with governing authorities and taking advantage of opportunities for improved stewardship of ministry and employer financial resources.  Please consider this brief checklist to determine if your ministry needs to look further into areas that could be classified as “We don’t know if we are compliant.” Please check all compliance requirements that are currently being met: File quarterly Form 941 or annual Form 944 with the IRS Issue Forms W-2 to all employees and File Forms W-2/ W-3 with SSA Ministerial Housing Allowance is only listed in box 14 of the Form W-2 – it is not included in box 1 Obtain Form W-9 from all individuals/businesses that are paid the cumulative total of $600 or more in t...