The Match Game show started on December 31, 1962. The premise of the show was simple. The contestant with the most matching answers with the celebrity panelists won the game and moved on to the “big money round”.
Contestant or celebrity, there is another match game that clergy can participate in with their church. Many churches have established 403(b)(9) retirement plans for their employees. The premise of a 403(b)(9) retirement plan is to allow employees and employers to make contributions into a retirement plan.
First, the employee can make elective deferrals into the 403(b)(9) retirement plan. Then, the employer will match the employee’s elective deferral not to exceed the plans specified matching amount. So, how does a 403(b)(9) retirement plan work in favor of the employee?
For example, if your employer matches a maximum of 3% of your $100,000 annual salary, then when you contribute $3,000 in employee elective deferrals your employer will contribute another $3,000 into your account for a total of $6,000. That is a 100% rate-of-return on your $3,000 investment!
Also, the $3,000 elective deferral is not subject to federal income tax, self-employment tax or state income tax. With an estimated combined tax rate of 32.3% (12% federal income tax rate + 15.3% self-employment rate + 5% state income tax rate) a $3,000 employee elective deferral would save approximately $969 in federal and state taxes. If you continue to contribute beyond the employer match, then for every additional $1,000 you contribute this will save you $323 in federal and state taxes ($1,000 x 32.3%).
Are you participating in your church’s “Match Game”?
Original content by clergyfinancial.com. This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.
