Editor’s Note: The question of whether mutual funds and other private investment services can administer a 403(b) plan for ministers and designate housing allowances is addressed in the Church & Clergy Tax Guide. For more guidance with housing allowances and retirement planning, check out chapters 6 and 10 in particular.
Can a retired minister receive a housing allowance?
Treas. Reg. 1.107-1(b) says this: “The term rental allowance means an amount paid to a minister to rent or provide a home, if such amount is designated as a rental or a housing allowance pursuant to official action taken in advance of such payment by the employing church or other qualified organization.”
(Note: The tax code uses the term “rental allowance.” I use the term “housing allowance” to apply to both rental and ownership. But “rental allowance,” when used by the Internal Revenue Service, is not talking about only rent. It’s talking about ownership, as well.)