403b housing allowance
client is a minister and has a 403b with the MBA (ministers benefit assoc).
we don’t want to rollover a portion of his 403b to an IRA because he would lose the housing allowance.
but if we rollover a portion of the assets to another 403b, outside of the MBA, will the IRS still recognize the housing allowance in another 403b plan(IRA revenue ruling 75-22)?
in short: does the IRS ruling apply to all 403b plans, if they are a minister, or does the IRS only recognize certain 403b plans for housing credit on ministers?
Thank you,
Douglas
Permalink Submitted by Alan - IRA critic on Thu, 2014-01-09 22:43
They probably will, as long as there is documentation from the MBA the amount of the housing allowance. I certainly would not transfer the entire 403b or the documentation could end. So if the allowance is 12,000 and the 403b distributes 5,000 and the new 403b distributes 7,000, it appears client could still exclude 12,000. This is the closest explanation I can find, and it does not really address whether the distributions are limited to that plan only, but I doubt the IRS will be concerned:>>>>>>>>>>>>However, the IRS Minister Audit Technique Guide published in April 2009 may provide some tax planning reminders (and IRS authority to back it up!).”A retired minister may receive part of his or her pension benefits as a designated parsonage allowance based on past services. Trustees of a minister’s retirement plan may designate a portion of each pension distribution as a parsonage allowance excludible under IRC § 107. (Rev. Rul. 63-156, 1963-2 C.B. 79, and Rev. Rul. 75-22, 1975-1, C.B. 49) The “least of” rules should be applied to determine the amount excludible from gross income. >>>>>>>>>>>>
Permalink Submitted by Douglas Bauerband on Fri, 2014-01-10 17:22
Thank you very much, Alan…happy New Year and a Healthy one at that.