As a minister, is my distribution or conversion from a 403(b) subject to SECA Tax?

SECA taxation of retirement plan distributions/conversions has not been thoroughly addressed by the IRS.  The determination of whether SECA is due is very fact-specific.  The only codified IRS guidance available is found in Code section 1402(a)(8) which provides that SECA is not due by a duly ordained, commissioned, or licensed minister for “…any retirement income received by such individual from a church plan…after the individual retires.”  However, there is no definition of “retires”.

For a “pre-retirement” distribution, i.e., a distribution prior to any level of termination of employment, it may be hard to argue the minister is retired. However, some practitioners feel that distributions on or after age 59 ½ may be eligible for such treatment, i.e., not subject to SECA, regardless of employment status. An article addressing this issue by a known practitioner in the church plan area can be found here

Because there is no clear guidance, ultimately it is up to the minister and their tax advisor to determine whether SECA taxes are due in various circumstances.

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