A pastor’s desire should be to serve, preach the gospel, and love people. Pastors don’t enter the ministry to get rich (well, hopefully not). But, because money can be a loaded subject, it’s vital to keep the big picture in mind. So, maybe you’re ready to discuss the pastor’s compensation package. Technology and phone – cellphone, computer, printer, along with standard office supplies.
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Subscriptions and books – study materials, periodicals, software.Conference travel – for speaking or attending.Hospitality – hosting speakers and special guests.Continuing education – degrees, courses, certificates.Travel expenses – automobile or airfare.Most importantly, this plan should outline what expenses can be covered and the guidelines for reimbursement. The IRS requires a church to pass a formal resolution for an accountability plan. Therefore, it’s standard practice to reimburse pastors for any costs directly related to their job responsibilities. Whether buying gas or plane tickets, costs for these experiences can add up quickly. One example is travel, which can range from local hospital visits to international conferences. Pastoring may involve many unique scenarios. Since this impacts the pastor’s well-being and ministry work, this paid leave is often covered. For instance, pastors may take time off regular duties for a sabbatical, book writing, or missions work. In these instances, churches can schedule additional days for paid leave to compensate for the holiday.Ĭomp packages may include additional types of paid leave. Other holidays may fall on a Sunday as well. However, pastors are in the unique situation of working weekends and major holidays like Easter, Christmas. Paid leave should include legal holidays, vacation, and sick leave. Health insurance (medical, dental, eye).Retirement savings plan such as a 401(k), traditional IRA, or 403(b) (most common for churches).The benefits in a pastor’s compensation package should cover all the basics, which include: Because of this, churches often provide money to help offset the SECA tax as part of the compensation package. Under this law, they are responsible for paying self-employment tax but exempt from social security and Medicare withholding. Ministers are covered under the Self-Employment Contributions Act (SECA). Social Security-Medicare OffsetĪnother allowance comes in the form of social security offset.
Visit the IRS website to read up on how this allowance affects salary and taxes. Housing allowances allow ministers to exclude the designated cost of their principal residence from federal income tax.
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The Housing Allowance covered in section 107 of the Internal Revenue Code is unique to ministers and is also known as a parsonage or rental allowance. Cash salary is the first thing people account for, but there’s more. Furthermore, the salary determines retirement plan contributions. Cash SalaryĬash salary is subject to taxes on federal, state, and local levels.
In addition, pastor compensation plans can include housing allowances, benefits, bonuses, reimbursements, and more. However, a comp package includes more than just a salary. Compensation provides monetary value to employees in exchange for work.
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