Q. This concerns retired ministers being able to designate distributions from a qualified plan as housing allowance and have been getting contradicting answers from various sources. From what kind of qualified plan can one designate distributions as housing allowance?
Some say that it can only come from a 403(b)(9) plan form various sources, while others say it can come from the following qualified plans: 401(a), 401(k), 403(b), 408(k), 414(e) or from a direct IRA rollover.
A. We know that definitely a housing allowance distribution can be made from a 403(b)(9). There is less certainty regarding whether a housing allowance distribution can be made from the other plans listed, but there is a possibility that it could.
However, a housing allowance distribution from an IRA is probably a definitive “no.” This is more than a gray area: it is almost a black hole! The new 403(b) IRS approved plans will have an option for a housing allowance distribution; but again, probably only under a 403(b)(9).
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