How to Win with this Church Retirement Plan

Written by Gene Wheeler on Nov 02, 2021 in Finance Management

Read Time: 2.5 Minutes

Does your church have a world-class retirement plan yet? If not, it's easier than you think!

Today, I am going to focus specifically on the SIMPLE IRA—and the benefits for both church employers and employees.

What's a SIMPLE IRA?

First, let's unpack those acronyms. SIMPLE stands for Savings Incentive Match PLan for Employees. And IRA stands for Individual Retirement Arrangements (or Accounts).

In short, the SIMPLE IRA is a start-up Retirement Savings Plan (RSP). It's ideally suited for small employers (less than 100 employees) not currently sponsoring a retirement plan. It allows employees to consistently set aside money from their paychecks and to invest it for retirement.

More specifically, the SIMPLE IRA is a tax-deferred, employer-provided retirement plan in the United States. 

8 ways employers win with the SIMPLE IRA 

1. Employers with better employee benefits packages hire better candidates.

2. SIMPLE IRA plans do not have the start-up and operating costs of a conventional retirement plan.

3. Employers generally have no state or local filing requirements and do not need to file an annual Form 5500 with the IRS.

4. No discrimination testing is required for employers.

5. The employer can deduct its contributions to a SIMPLE IRA plan as a valid business expense.

6. Record-keeping is simplified as the IRS prohibits participant loans for SIMPLE IRA plans.

7. Employers can motivate and reward individual employees' responsibility for their own retirement. How? An employer can elect to match up to 3% of employee contributions. If the employee has "no skin in the game," then neither does the employer.

8. An employer may terminate a SIMPLE IRA plan at the end of any calendar year if that plan no longer suits its needs.

9 ways employees win with the SIMPLE IRA 

1. SIMPLE IRAs can provide a significant source of income at retirement.

2. Participation is voluntary. Employees are not required to make contributions to a SIMPLE IRA.

3. Employee contributions occur on a pre-tax basis (not subject to federal income tax withholding).

4. Employees may elect to terminate their contributions (paycheck withholding) to a SIMPLE IRA plan at any time.

5. Both employee and employer contributions to SIMPLE IRA accounts are immediately 100% vested (exclusively owned) by the employee.

6. The SIMPLE IRA is fundamentally an individual retirement account. As such, each new account is opened by the employer in the individual employee's name. And it always remains in the employee's name – even after they leave the sponsoring employer.

7. Employees can invest in any stock, bond, mutual fund, or other investments the plan trustee offers. Each employee makes the investment decisions for their own account.

8. Employees age 50 and older can make catch-up contributions over and above the annual employee contribution limits.

9. Employees are not limited to the employer's choice of plan trustee. Employees can move their SIMPLE IRA assets to another SIMPLE IRA account with a different financial institution.

Further reading: 5 Steps to a Minister's Retirement Plan


How does my church get started?

You'll need to choose a financial institution to serve as trustee of the SIMPLE IRAs to hold each employee's/participant's retirement plan assets. That trustee receives both the employer and employee contributions made to the plan. That trustee also provides quarterly statements of investment activity directly to employees.

And while setting up a retirement plan may feel daunting to you, large investment firms (sorted alphabetically below) have teams specifically trained to walk you through the process.

·         Charles Schwab SIMPLE IRA

·         Merrill Edge SIMPLE IRA

·         TD Ameritrade SIMPLE IRA

·         Vanguard SIMPLE IRA

Preparing for your financial future

At StartCHURCH, we want to give you the tools you need to not only protect and manage your church but help set up you and your church staff for a successful financial future.

If you would like expert help to take advantage of the available tax, insurance, and retirement benefits for ministers, we can help you customize a generous minister's compensation package. Give us a call at 877-494-4655 or click the link below to get started today!


Please feel free to comment. We always appreciate good dialogue. However, we do moderate each comment to ensure that it is on topic and not derogatory to other participants. We ask that you keep your comments brief and pertinent to the topic so that others may benefit.

Raul Rivera

And receive Book 1 of our Grow Trilogy FREE today! This series gives you the strategies you need to get started growing your church plant today!