Because MMBB Financial Services is a church plan, we are able to designate 100% of a retired ordained member’s annuity payments, required minimum distributions and partial or complete distributions as eligible for the clergy housing allowance.
As with the clergy housing allowance during a minister’s working years, the maximum that can be excluded from taxable income for housing allowance is the lower of:
MMBB annuity payments and distributions may be eligible for the housing allowance designation even if the member did not receive the housing allowance when the contributions were made. For example, it is possible that a clergy person could be employed at a non-steeple employer who is eligible to designate a part of the individual’s compensation as housing allowance, but has decided not to do so.
MMBB Financial Services reports the housing allowance information on the 1099. The housing information appears differently on 1099s prepared by State Street and Conduent (formerly Xerox).
Rollovers to MMBB can be designated as housing allowance for minister if the rollover account was the result of retirement contributions made while the clergy person was eligible the housing allowance designation.
Distributions from your MMBB retirement account made prior to retirement are eligible for the housing allowance. The maximum amount eligible for the housing allowance is limited to the lesser of 1) the amount designated as housing allowance (income from employer and distribution from MMBB); 2) the fair rental value of the furnished house, plus utilities; or 3) the actual housing costs (mortgage payments, down payment on a house, utilities, property taxes, repairs, purchase of furnishings, yard expense, home insurance, etc.).
Disability benefits received by clergy members provided through the MMBB Financial Services Comprehensive Plan may qualify for the housing allowance for minister’s designation. Education grants issued by MMBB are also eligible for the housing allowance designation. There could be situations where the full amount of disability benefits will not be able to be excluded from taxable income. MMBB will notify the members when this will occur.
Although MMBB designates 100% of distributions as eligible for housing allowance for clergy exclusion, the church is responsible for determining the actual amount of the distribution to exclude based on the guidelines above.