WASHINGTON, D.C. (BP) — A bipartisan bill may give ministers who decided long ago to opt out of Social Security benefits the chance to change their minds.
The Clergy Act, submitted by Sens. Katie Britt (R-Ala.) and Maggie Hassan (D-NH), would allow for a period in which clergy may revoke their exemption from Social Security coverage. Another version of the bill has been reintroduced by Reps. Vince Fong (R-CA) and Mike Thompson (D-CA) in the House.
A dual tax status accompanies one who becomes a minister – as an employee for federal income taxes and self-employed for Social Security tax purposes. The decision to opt out of Social Security must be made within the first two years one has ministerial earnings of more than $400 a year.
Opting out results in more take-home for the minister but sacrifices a large portion of anticipated retirement income. It may also affect eligibility for standard-priced Medicare as well as Social Security disability benefits should he become disabled before retirement age. Potential survivor benefits from Social Security may also be denied to a minister’s wife and children.
GuideStone Financial Resources of the Southern Baptist Convention is prepared to provide guidance to ministers should the Clergy Act become law, said GuideStone President and CEO Hance Dilbeck.
“Social Security complements the retirement benefits GuideStone provides to pastors and other ministers. So many pastors made the short-term decision to opt out of Social Security without understanding the long-term implications of that decision. GuideStone is grateful that bipartisan members of the U.S. Congress have re-introduced the Clergy Act,” he said.
“We believe that the opportunity created by this legislation is an important element of financial resilience for those we serve,” Dilbeck added, noting that GuideStone has sent a letter to Congressional leadership urging prioritization of the bill.
“[The law would] assist those who have dedicated their lives to kingdom work to finish well,” he said.
Per standard Social Security requirements, applicants will need to pay in for approximately 10 years before becoming eligible for benefits. A plan of notifying those who qualify will be submitted by the commissioner of Internal Revenue no later than 90 days after the bill becomes law.
In the Work Incentives Improvement Act of 1999, ministers received a two-year window to re-enroll into Social Security. Fong and Thompson’s bill would provide a window until April 15, 2030.
GuideStone Vice President and Chief Experience Officer Christy Teeter said the bill would help bolster ministers’ later years financially.
“We are hopeful that the opt-in window created by the Clergy Act will help pastors not currently covered by Social Security to move closer to a complete retirement package and the enhanced financial security it provides as they move into that season of post-vocational ministry,” she said. “Should the Clergy Act become law, GuideStone will work to assist pastors who have opted out of Social Security to inform them of the steps and deadlines they may have to opt back in.”