Other factors affecting your pension benefit
There are several factors that may affect your pension benefit, including tax considerations, disability status, and military service. In addition, if you return to eligible employment after you retire, certain rules apply to your pension benefit.
In addition to accrued credits, retirement age, marital status, and which payment option you choose, there are other factors that may affect your pension benefit.
Tax considerations and resources
If you are a minister of the Word and Sacrament or an eligible commissioned pastor, you may exclude all or part of your pension from taxable income as a housing allowance, subject to the requirements of the tax laws. All recipients of periodic payments must complete a withholding election form and may have tax withheld for federal income taxes, as well as state taxes where applicable. Once your pension begins, the benefit is taxable under federal and some state tax laws. Your pension payments are reported to the IRS on Form 1099-R.
The Board recommends consulting with your personal tax adviser or a qualified tax professional who understands clergy tax issues. You may also refer to the following resources:
- The Church & Clergy Tax Guide, by Richard R. Hammar, is available through Christianity Today International.
- You can call the IRS at 800-829-3676 for publications including IRS Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers — or access forms from the IRS website.
Social Security and your pension benefit
Social Security is a government program that provides one source of retirement income. Benefits are funded by contributions from you and your employer while you are working.
The Benefits Plan assumes participation in Social Security, which provides you with retirement or disability income based on your Social Security covered earnings each year. The Church strongly supports participation in the Social Security program. Your pension benefits may not be adequate for a secure retirement without Social Security benefits.
Your spouse and dependents may be entitled to receive Social Security benefits upon your death. They must apply in writing directly to the Social Security Administration.
Divorce or dissolution
If you separate from or divorce your spouse, or dissolve your marriage, a domestic relations order (DRO) could require all or part of your plan benefit be paid to someone else — your former spouse, for example. In that case, the plan pays benefits directly to someone named in the order, provided it meets the requirements of a DRO.
As soon as you become aware of any court proceedings that may affect your benefits, call the Board of Pensions at 800-PRESPLAN (800-773-7752) (TTY: 711).
Ministers Bridge Coverage
Ministers Bridge Coverage is available for ministers of the Word and Sacrament enrolled in the Congregational Pastors Package, Transitional Pastor’s Participation, or the Covenant Package who leave active service and are seeking a new call. Through Ministers Bridge Coverage, you may continue enrollment in all or some of your benefits for up to 24 months at your own cost.
You may only continue the coverage you had immediately prior to your change in employment status. If you had pension coverage, you accrue pension credits based on the salary on which you elect to pay dues (your last effective salary or the median effective salary).
If you choose not to pay dues for pension coverage, but to do so for medical only, you do not accrue additional pension credits for the time you are enrolled in Ministers Bridge Coverage.
Your Ministers Bridge Coverage must be verified by the presbytery (if you are an installed pastor) or your employer (if you are a minister of the Word and Sacrament who is not serving in an installed position).
Leave of absence
You may remit dues for Ministers Bridge Coverage if you:
- are enrolled in the Congregational Pastors Package, Transitional Pastor’s Participation, or the Covenant Package
- have not been permanently terminated
- take a leave of absence from Church employment and return later to your same employer
You may only continue the coverage you had in effect for the year before you left service.
Military duty
The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) and Heroes Earning Assistance and Relief Tax Act of 2008 (HEART) provide various rights to employees called to military duty in the uniformed services, including the right to the continuation of pension and other benefits during military leave.
Disability
If you qualify for a disability benefit under the Death and Disability Plan and you are covered under the pension provisions, you continue to earn pension credits while younger than age 65, equal to 1.25% of the greater of either:
- your pension participation basis on the date disability benefits begin, but no more than the IRS annual compensation limit, or
- the median effective salary as determined by the Board
If you qualify for a disability benefit under the plan, you also receive, if granted, experience apportionments on your pension credits.
Generally, disability benefits under the plan end at age 65, unless you become disabled after age 62 in which case disability benefits can last longer.
You can elect to stop disability payments and begin receiving your retirement pension, including any pension credits earned during disability, at age 55 or later. However, if disability benefits begin after age 62, then the disability benefit is reduced at age 65 by the amount of the retirement pension benefit, regardless of whether you choose to begin receiving your pension, and continues only until you reach your predetermined maximum duration as defined in the Benefits Plan.