SEP for a minister
Have new client who is a minister for over 25yrs. He opt out of SS about 20yrs ago so his church decided to fund an annuity for him as a side bonus. Approx. 5-10k per year.
They set the annuity up as a SEP-IRA (408).
they give him a 1099 for his salary.
the church sends into the annuity the funding of bonus every year from their checkbook
Questions:
1. If the minister is employed by the church, can he have a SEP-IRA?
2. Can they send him a 1099 instead of a W-2?
3. doesn’t the church have to offer everyone in the church that gets a salary a SEP-IRA?
4. If the minister is okay with a SEP and receives a 1099, shouldn’t he be sending in the check to the annuity and not the church?
Any other help would be appreciated.
Thank you,
Douglas
Permalink Submitted by Alan - IRA critic on Thu, 2021-07-29 18:03
If employed minister should receive a W-2 and the church should be making the SEP contributions. If an independent contractor receiving a 1099, minister can fund his own SEP for the independent contractor payments. It may be possible for the minister to be a church employee, but also to be an independent contractor with respect to personal services rendered such as weddings where minister is paid by those hiring the services. I don’t expect the IRS would be too interested in the payment arrangements.
Yes, there are variable possibilities for paying a minister, but if minister is clearly an employee a W-2 should be issued.
Yes, subject to the 3 out of 5 years employment requirement, and the $650 minimum annual salary requirement.
Yes.