Church 403(b) Plans

Q. A church sponsors a 403(b) annuity plan. The minister is paid by the church but also has self-employment income from other sources. If the church only includes the minister’s income paid by the church, can the minister participate in the church’s 403(b) plan, or does the church need to sponsor a 403(b)(9) plan?

A. Absolutely the minister can participate in the 403(b) plan! Regarding the minister’s self-employment income, he/she can establish any plan for that income i.e. SEP, QP, BUT if they want to establish a 403(b), it must be a 403(b)(9). See Internal Revenue Code Section 404(a)(10) where that requirement is found.