Should Churches use a SIMPLE IRA?

As the name suggests, SIMPLE IRAs are extremely simple for churches to operate. SIMPLE plans can be setup as either matching or non-matching plans. If a church chooses to use the matching approach, they can match, dollar-for-dollar, each employee’s retirement contributions up to 3% of the pastor's total salary (ONLY their salary and NOT their housing allowance). They can do less than 3%, but no more. In this setup, employees can also contribute up to $12,500 towards their SIMPLE plan as of 2017.

If the church chooses to use the non-matching approach, they must contribute 2% of every employee’s salary towards their respective SIMPLE plans regardless of whether or not the employee makes any contribution.

What I like about SIMPLE plans is that they are, well, simple. They are extremely easy to set up and administrate. What I hate about SIMPLE plans is that the church can only contribute a very small amount towards the pastor’s retirement account.

Obviously, a lot more could be said about the intricacies of and requirements surrounding SIMPLE IRAs. I am not an accountant, tax professional, or certified financial planner, and you should definitely seek counsel from one or more of these individuals before deciding on which plan is best for you and your church.

However, while it is definitely better than nothing, my non-credentialed belief is that you can do a lot better than a SIMPLE IRA for your pastors.

For a nice overview of SIMPLE IRAs, click here.

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Coming Soon!


Pastors are so good at so many difficult things - preaching/teaching, counseling, discipling, caring - but can very often be completely clueless when it comes to handling their money wisely. This can be true of their day-to-day finances, but is often more true in regards to their retirement planning.

The Pastor's Guide to Wise Investing takes the, often, confusing world of investing and makes it simple and easy to understand by compiling and condensing the best advice from the best investors of our day into one simple, easy-to-read guide.