The legislation seeks to address concerns from faith leaders who, under current law, make a one-time, irreversible decision to exempt their ministerial earnings from self-employment taxes. This exemption means they do not contribute to or receive Social Security and Medicare benefits based on those earnings. The Clergy Act would establish a re-enrollment window for these individuals to reverse their earlier decision and gain access to Social Security benefits by meeting standard eligibility requirements, which include paying into the system for 40 quarters (10 years).

Senator Britt emphasized the fairness of the bill, stating, “I’m proud to reintroduce the Clergy Act, a commonsense measure to support our nation’s faith leaders. This bill would allow clergy members to opt back into the system and pay into Social Security, ensuring fairness while providing an avenue to a secure retirement. I look forward to getting this bipartisan legislation enacted into law.”

Senator Hassan also underscored the importance of the measure, highlighting the role clergy members play in their communities. “Clergy are important members of our community, who help lead their congregation and provide comfort during quiet moments and in difficult times,” Hassan said. “This commonsense bipartisan measure will allow clergy to opt back into Social Security, helping them to safeguard their financial future and plan for a dignified retirement.”

Historically, Congress has provided similar opportunities for clergy members to re-enter Social Security, including in legislative actions in 1977, 1986, and 1999.

The Clergy Act has received endorsements from organizations such as the Church Alliance, the Evangelical Council for Financial Accountability (ECFA), and the National Association of Evangelicals (NAE). ECFA President and CEO Michael Martin voiced his support, stating, “Early in their ministries, some pastors opt out of Social Security and then have no opportunity to fix that choice once they realize their mistake. This bill opens a very reasonable window to help and would be a breath of fresh air for them.”

Additionally, the bill includes provisions requiring the IRS to develop and submit a plan to Congress outlining how it will notify clergy members of their eligibility to request a revocation of their exemption from Social Security participation.

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

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