Is It Okay for a Minister to Opt Out of Social Security?

If a Pastor opts out of Social Security …. buy disability insurance. If you become disabled without SS you are on your own!

No matter what you do (opting in or out) start investing early whether it be an IRA or [URL=http://en.wikipedia.org/wiki/403%28b%29] 403(b)[/URL]. This should be in addition to social security!

In the candidate process have a straight talk about finances with the board of the church. While this should not be the first conversation neither should it be ignored. God does not expect Pastors to live in poverty. Churches that expect to habitually skimp on Pastoral support should be avoided by the vocational pastor.

It’s difficult to have that (the financial) conversation after you arrive!

Churches that are unable to adequately pay a pastor are good candidates for either: a bi-vocational Pastor or closure!

[Aaron Blumer]

2) it is based on receiving public insurance (essentially life or health), not paying into it;

That was my point. Item two tries to separate receiving public insurance in isolation from the collection of it and that’s really a stretch. There can’t be anything there to receive unless it is collected first. So they really ought to include both with an and/or or something. The language is just goofy.

I am not sure I agree here for several reasons. Yes, at face value, there is nothing to pay out unless it is received. But the objection is not to paying. Think about it: Why has the government has given clergy and no one else the option to opt out? The reason, it seems to me, is the recognition about being paid by the government for religious work. I think that is why tTt, remember the first generation paid nothing in, and got a lot. The last generation, whenever that is, will pay a lot in and receive nothing. Furthermore, if you doubt that paying and receiving are two different things, just consider your income taxes that are paying for all manner of things are you not receiving, and people who are not paying are receiving. The vast majority of people who get government benefits do not pay enough in taxes to cover them.

Many I know who have opted out reason thus:
1. good stewardship is a prinicple of my faith
2. the system is poor stewardship
3. ergo, if a person has a choice, our faith commends that he not participate

So here’s the question: Are you opposed, for religious reasons, to receiving money from a bad investment? Most people would say no. (If you are, then send me the proceeds of your bad investments because I am not opposed to receiving them.)

That’s a bit of an oversimplification because the issue in the law is really public insurance, not merely a bad investment. But let’s work with it here for a minute: Someone buys universal or whole if insurance, which most people seem to agree is a bad investment. Yet if your spouse dies, you will gladly take the money, even though it was bad stewardship to have it to begin with.

Or take the issue of having money in a passbook savings account. This is undeniably a bad investment since the interest rate does not even keep up with inflation. Yet you would not turn down the paltry dividend simply because it was a bad investment.

But more importantly, the law does not allow for the objection as presented here. This objection is not about stewardship, but about receiving public insurance, and that is the only objection allowed, right? It is not a religious objection to receive money from a bad investment or bad stewardship.

Here’s another way to look at it: If the law did not provide the chance to opt out, would you still refuse to pay and accept the consequences of fines and probably jail for tax fraud or tax avoidance? If your answer is no, then you probably don’t have an actual conscientious/religious objection.

I think SS is a bad ponzi scheme, and far less got Madoff put in prison. I think it is bad stewardship. But it is the law, and the objection is very narrow: receiving money from public insurance based on income received for ministerial tasks.

Rationale for opting out:

* It’s socialism
* It’s not a government ordained function
* My government provided a choice and I selected to opt out

Hopefully without being too personal, Jim, here’s my response: If this is your reason, will you reject SS income based on secular work? Because that money affects both of your reasons here (the third is not a reason, per se). The reason it is worded as it is I think is due specifically to the church/state relationship.

“It’s socialism” and not “government ordained” are not specifically related to ministerial income and church/state issues, are they?

Not too personal

Hopefully without being too personal, Jim, here’s my response: If this is your reason, will you reject SS income based on secular work?

Nope!

I have often wondered what could possibly be the logical basis for allowing only pastors to opt out. What about a farmer who has the same struggle over receiving public insurance in return for his farming labors? Why only give pastors the opportunity to go through this exercise in conscience?

Because it is about ministerial income as Form 4361 says. Farmers (and anyone else) does not have ministerial income from farming. It doesn’t even apply to a ministers’ secular income. It is only ministeridal income. And I think it has to do with church/state issues.

Then aren’t ministers not only opting out of Social Security, but also Medicare / Medicaid?

Correct. And I am curious, what will happen if there comes a universal health care? Will these pastors who objected also object to that? I am not sure how they could not object, and thereby turn down the insurance. But I haven’t thought through it enough. But if one objects to receiving public insurance based on ministerial income, it would be hard to argue that a “public option” is not public insurance, and that because it comes out of income taxes it isn’t funded by ministerial income. Again, not sure, just thinking out loud here.

I would urge anyone reading this thread who is considering getting out of Social Security not to rely on “the pastor in the next town” for advice, but rather to meet with a tax expert for clergy and get ALL the information ASAP before you do (or don’t do) anything related to opting out of Social Security.

Respectfully, I question how a tax expert has any insight here? This is a theological issue, about whether or not it is biblical to use ministerial for public insurance. That is not something most tax experts, even with clergy tax expertise, can address. It is a question that must be addressed by theologians.

Saying to ask a tax expert seems to indicate that this is primarily a financial/tax planning/future planning issue. And it isn’t. It has nothing to do with any of that.

The question of “Will I be able to retire” or “Will I have medical coverage” or “Will my family have benefits if I die” is totally irrelevant. There is only one question: Does my conscience forbid me from receiving money from public insurance based on my clergy income?

How does a tax expert help to answer that one?

Something that complicates this is that even if a pastor is opted out, it is only for his ministeral income. He is in on any secular work that he does. He also will still get to collect on that work, even after he opted out. I also echo those who say make sure you have an accountant giving advice.

Nope!

Thanks Jim. If I can pursue this a bit more, your stated reasons seem to have nothing to do with ministerial income. In other words, “socialism” is true whether ministerial or secular. “Not a government function” is true whether ministerial or secular.

So if you are objecting to receiving money based on the fact that it is socialistic or outside the government’s function, it doesn’t matter whether it is ministerial or secular does it? It is wrong either way.

Something that complicates this is that even if a pastor is opted out, it is only for his ministeral income. He is in on any secular work that he does. He also will still get to collect on that work, even after he opted out. I also echo those who say make sure you have an accountant giving advice.

I am posting way too much here, but how does this complicate it? The issue is only ministerial income, again, I think for church/state reasons. Money from your secular employment has not church/state implications, and therefore is irrelevant to this discussion.

I would also ask you directly, how does a tax expert help you on matters of conscience?

[Larry] Thanks Jim. If I can pursue this a bit more, your stated reasons seem to have nothing to do with ministerial income. In other words, “socialism” is true whether ministerial or secular. “Not a government function” is true whether ministerial or secular.

So if you are objecting to receiving money based on the fact that it is socialistic or outside the government’s function, it doesn’t matter whether it is ministerial or secular does it? It is wrong either way.

The government doesn’t provide the non-ministerial worker the opportunity to opt out. Had I been given that opportunity way back I would have.

I still think that social security is socialism. I have a lot of issues with the tax policies of the US Government. But I submit to them.

What they will give me (if I make it to 66), I will take.

It would be interesting to see some documentation on what the rationale behind 4361 was. I’m sure it’s out there. I wonder if they really intended to say… “You can opt out if (1) you believe getting SS payments would be the same thing as getting paid the gov’t for religious work and (2) you believe getting paid by the gov’t for religious work is wrong.”
It seems unlikely to me that anybody would think getting something back from a fund you paid into would be “getting paid by the government for religious work.”

Moore argues in his post that SS isn’t getting paid back from a fund you paid into. He is correct from an accounting standpoint. However SS was invented and marketed and still generally presented as exactly that… you pay in, you get back. So it’s quite inconsistent of the IRS to turn around and say “You can opt out if you believe it’s wrong to get paid back… [regardless of what you believe about paying in] ” It reminds me of the old joke “Do you believe it would be wrong for you to stop beating your wife?” The question makes unreasonable assumptions. If you aren’t beating your wife, there is no way to answer it without amending it a bit into something like “Would you believe it would be wrong to stop beating your wife if you were beating your wife?”

So many probably read the 4361 as “Do you believe it is wrong to get these payments for from the gov’t for your ministerial work since they should not collect them from your ministerial wages?” I can’t blame them for seeing it that way.

Larry wrote in #20:

Quote:
I would urge anyone reading this thread who is considering getting out of Social Security not to rely on “the pastor in the next town” for advice, but rather to meet with a tax expert for clergy and get ALL the information ASAP before you do (or don’t do) anything related to opting out of Social Security.

Respectfully, I question how a tax expert has any insight here? This is a theological issue, about whether or not it is biblical to use ministerial for public insurance. That is not something most tax experts, even with clergy tax expertise, can address. It is a question that must be addressed by theologians.

Saying to ask a tax expert seems to indicate that this is primarily a financial/tax planning/future planning issue. And it isn’t. It has nothing to do with any of that.

Larry,

You are missing the point. In the eyes of the IRS, this IS a tax issue. Theologians can debate it until the Lord returns, and it may be a very personal and theological decision, but when it comes to how you are going to file your tax return, this is absolutely and ultimately a tax issue which has been hammered out and shaped in court for years. My point is not that it is a “financial planning” issue, but that it is an area where you had better dog gone well know what you are doing before the IRS. I would personally put very little weight in what the average pastor has to say about the matter.

That is why I would caution anyone who is not an expert in this area to avoid getting too deeply into giving advice and trying to “clarify” things for others.

Not a rationale about anything ….. just a history lesson

http://www.nysscpa.org/cpajournal/2006/506/infocus/p15.htm

When Social Security was implemented in 1935, the amount of earnings subject to tax was $3,000. The tax rate was 1%.

Now 6.2% on earnings up to $ 90,000 (source: http://www.nysscpa.org/cpajournal/2006/506/images/p18.pdf)

When Social Security was implemented, there were 16 workers for every Social Security recipient; today there are 3.3 workers for every recipient, and it is estimated that by 2030 there will be only two workers for every recipient. A “pay as you go” approach becomes less feasible when there are fewer workers supporting each benefit recipient.

in 1935 fewer people lived long enough to collect benefits; the average life expectancy was 67 years. Today the average life expectancy is 77 years, and there are more than 48 million recipients.

Dealing with social security is one of the classical [URL=http://en.wikipedia.org/wiki/Third_rail_%28metaphor%29] third rails[/URL] of US politics. The last national candidate that was candid about finances was [URL=http://en.wikipedia.org/wiki/Ross_Perot] Ross Perot[/URL].

One year ago, social security trustees warned that the Social Security trust fund will run out by 2037, four years earlier than the previous year had predicted, while the Medicare hospital trust fund will be insolvent by 2017, two years earlier than projected last year.

http://abcnews.go.com/Business/Politics/story?id=7571108&page=1

It was reported last week (http://finance.yahoo.com/focus-retirement/article/108747/next-in-line-f…) that “for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits.”

This post and the previous are off topic of opting out, but are on topic about the future of social security. The US is heading for a giant financial crisis - probably in my life time (I am 10 away from the three-score and ten).

Individuals need to get debt free … churches should avoid borrrowing and tighten their finances.

Here is my major recommendation for the day: visit www.DaveRamsey.com — then shave your head, drink the Kool-Aid, and start loving beans and rice.

Our nation is heading for a financial crisis of prophetic proportions.

I guess my question is about what it means to be a “conscientious objector.” I opted out because I believe that the Bible teaches the principle of personal responsibility for one’s stewardship. Therefore, I object to the idea of the government providing for my retirement. It is not something I would go to jail over, so if I were not a pastor, I would not refuse to pay SS. But given the option to express my objection, I took the opportunity. Maybe my understanding of the term “conscientious objector” is flawed.