When Comprehensive Plan coverage begins

An employer can consider offering coverage after they submit the proper paperwork and it is received by MMBB.

Membership in the Comprehensive Plan (including disability and death benefit coverage) begins on the day MMBB receives the initial premium payment. Invoices are mailed on the first business day of the month after receipt of a completed application.

If you want coverage to take effect sooner, include your first premium payment with the membership application. Call MMBB at 800.986.6222 or email billing@mmbb.org to determine the amount due.

Contribution Options for the Retirement Only Plan

A variety of design options are available for the Retirement Only Plan:

  • Membership Application (Form A-1) allows your church or ministry to contribute a fixed dollar amount each month—or a fixed percentage of the employee’s compensation.
  • Alternatively, you can make periodic (e.g., quarterly, annual) contributions. These will not appear on your monthly invoice. The process for making periodic contributions is on page 17.
  • Vesting and matching options are also available. You specify these when you sign an adoption agreement for the Retirement Only Plan. Contact MMBB if you need more information or wish to add or revise these options.

When designating a housing allowance amount for the upcoming year, ordained clergy need to keep in mind that a large housing allowance limits the amount they can save for retirement. If one’s income is substantially reduced due to housing allowance, it decreases the available amount of cash that can be contributed on an employee’s behalf.

If you would like to learn more, please contact us at 800.986.6222 or email service@mmbb.org.

Enrollment in Retirement Only – Employee Contribution Plan

Step 1 – Board of Trustees Adopts a Resolutions

Before an employee completes a Membership Application for the Member Contribution Plan, your board of trustees must adopt a resolution authorizing you to modify employee salaries for the purpose of pre-tax retirement contributions. See below for suggested wording. Approval of the resolution must be refl ected in the board’s minutes.

Resolution Authorizing Salary Modification

WHEREAS, Section 403(b) of the Internal Revenue Code permits ___________________(employer) to purchase annuity retirement benefits for its employees on a tax-deferred basis, and the employer wishes to cooperate with and assist its employees in obtaining such benefits; now, therefore, be it RESOLVED, that upon receipt of written request from employees, the officers of ___________________ (employer) be, and they hereby are, authorized to make such modifications in the terms of compensation of such employees and to take such further action as in their judgment shall be appropriate and desirable in order to enable such employees to receive annuity retirement benefits and obtain the benefits of Section 403(b) of the Internal Revenue Code.

Signature ___________________________________ Date_______________
                                    (Church Officer)

Step 2 – Employee signs a Salary Reduction Agreement )Form A-13a)

The Member Application for the Member Contribution Plan must be accompanied by a signed Salary Reduction Agreement (Form A-13a). Any amounts withheld before this agreement is signed will be treated as after-tax contributions and must also be reported as taxable income on the employee’s IRS Form 1040.

To download a Salary Reduction Agreement, go to www.mmbb.org and search “A-13a” or request it when you contact MMBB to obtain a Member Application form.

Submit this form during the month before the pay period in which the employee would like to have the money withheld. Example: Your payroll period is every two weeks and the member wants member contributions to start during the February 5-19 pay period. In order for the withholding to be treated as a pre-tax member contribution, MMBB must receive a properly filled out and signed Salary Reduction Agreement by the end of January.

Determine the Allowable Contribution to the Member Contribution Plan

The IRS sets the annual limit on how much an employee can contribute to their account on both a pre-tax and after-tax basis. Before submitting a Salary Reduction Agreement, have your employee call MMBB at 800.986.6222 and request a calculation of the maximum allowable employee and employer contribution. The employee should have the following information available:

  • Cash salary, including any amounts currently withheld for the Member Contribution Plan and for Flexible Spending Accounts (FSA).
  • The fair rental value of a parsonage, plus utilities and a parsonage allowance, or any cash housing allowance.
  • Amount of Social Security/Medicare tax off set. This is particularly important if the pastor’s housing allowance represents a sizable portion of their compensation. The value of the housing allowance is excluded from compensation when calculating the maximum allowable contribution. This has the effect of reducing the amount a minister can contribute to their retirement savings.

Member Contribution Plan Salary Reduction Agreements remain in effect until:

  • MMBB is notified of the member’s desire to terminate the agreement (employers cannot terminate these agreements without the member’s written consent).
  • Termination of employment.
  • There is a new Salary Reduction Agreement.
  • The total amount of member contributions exceeds the IRS limit (MMBB will resume billing for the Member Contribution Plan at the start of the following year, based on the most recent Salary Reduction Agreement on file.)
  • A hardship distribution is made from the Member Contribution Plan. Before a hardship can be processed, the member will be informed that a new Salary Reduction Agreement (A13a) needs to be completed and submitted to MMBB. MMBB will resume billing after the six-month suspension period required by the IRS. Remind the employee that in order to start up again, a new Salary Reduction Agreement (A-13a) needs to be filled out and provided to MMBB.

The Member Contribution Plan for Self-Employed Clergy

A clergy person who is treated as self-employed for federal income tax purposes can still contribute to the Member Contribution Plan. They must have an Adoption Agreement on fi le with MMBB formally adopting the plan before they begin making contributions. The clergy person should sign a Membership Application (Form A-1) as both the “employee” and “employer.”

For these contributions to be tax deductible, the self-employed clergy person must make them directly to MMBB (i.e., not via a Salary Reduction Agreement). If MMBB bills you, the employer, for these contributions, they must be treated as taxable income.