What Is A 403b9  

      A 403b9 is a retirement savings plans for people who are working for non-profit evangelical ministries and institutions. A 403b9 is very similar to 403b or 401k plans but are not subject to certain ERISA (Employee Retirement Income Security Act) checks and requirements. For example, 4039b plans do not have to submit an annual 5500 report.

     However, this does not stop occasional non-discrimination testing. In addition, a 403b9 plans offers retired ministers to get money in the form of housing allowance.

     An employer has the discretion to determine which employees are eligible for a 403b9 plan. For example, an employer is free to impose age restrictions or service requirements before an employee is allowed take advantage of the plan.

     Based on the plan provisions, an employee can ask his employer to deduct the money that he want to contribute to a 403b9 plan. This contribution can either be from gross wages (pre-tax wages) or it can be after tax amount. The employer can make matching contribution, non-matching contribution or discretionary contribution depending upon the type of plan.

      Like all retirement savings plans, even 403b9 has its advantages. Some of the advantages listed below:

  • All contributions made from gross wages are tax-deferred until the money is withdrawn.
  • Earnings from dividends, capital gains and interest are tax-deferred.
  • You can rollover assets from other retirement savings plans into a 403b9 without having to pay taxes.
  • Ministers who make tax-deferred contribution do not have to pay Social Security tax.
  • Ministers who retire can get their retirement benefits as tax-free housing allowance. This allowance has to be within legal limits.
  • If the employer makes any type of contribution to the 403b9 plan, he is not subject either Social Security tax or income tax for the amount.

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