“I am conscientiously opposed to, or because of my religious principles I am opposed to, the acceptance (for services I perform as a minister…) of any public insurance that makes payments in the event of death, disability, old age or retirement; or that makes payments toward the cost of, or provides services for, medical care. Under penalties of perjury, I declare that I have examined this application and to the best of my knowledge and belief, it is true and correct.”
Affix your signature to this, the key part of IRS Form 4361, Application for Exemption From Self-Employment Tax for Use By Ministers, Members of Religious Orders and Christian Science Practicioners, and free your exalted clergy self from having to pay the crushing 15.3% SECA tax, self-employment tax that we must pay. During the years I lived in a pastorium and did not have a mortgage payment, the SECA tax bill was my largest bill. In time health insurance surpassed it but the quarterly bills were always steep, and relentless.
But, early in one’s ministry there is a window to opt-out of Social Security, saving those steep tax payments…forever. My guess is that the average SBC minister, certainly younger ones in smaller churches with several dependents, have little income tax bill at all but get murdered with their SECA tax bill. It would be great to do without this, right?
Almost certainly, WRONG!
One of the things my state convention and SBC entities, GuideStone in this case, does well is in handling these kind of tax questions that affect us all personally. GuideStone provides regular, sober, and solid advice to ministers concerning tax matters.
On the Social Security opt-out GuideStone says,
Opting out of Social Security can be highly detrimental to your future,” says GuideStone President O.S. Hawkins. “Not only does Social Security provide a benefit upon attainment of retirement age, it also provides survivor benefits to your children should something happen to you while they’re young. All young ministers should think long and hard before forgoing valuable Social Security benefits for you and your family.”
On a purely economic basis, the general thinking is that Social Security is not a good investment and that most any private plan would prove more beneficial over time. You’ve heard of the Galveston opt-out experience, right? You think you are committed, highly disciplined, and super savvy in handling money and can provide for your family much better than the government?
Probably not.
Most of my clergy colleagues show little evidence of financial acumen or discipline. GuideStone’s staffer who deals with their Mission Dignity program said, “In 20 years of assisting retired ministers on low incomes, I have met quite a few who opted out of Social Security at a young age. In spite of good intentions, savings were never set aside and these ministers reached retirement without sufficient resources. Not one of our Mission:Dignity recipients has ever told me, in retrospect, that opting out of Social Security was a good idea.”
But the greater issue is the moral and ethical one. I do not know a minister who could sign the conscientious objection statement above who would not be lying if they did so. Not one. I know a great many who object to paying taxes, who think Social Security is a bad deal, and who distrust government. But I don’t know one who would not take the checks if offered.
In my own little foray as an ordained minister for these last several decades, I have had not the least bit of hesitation and timidity about taking as much in housing allowance, our only true tax break, as I legally can. But way back when I started out in a small church with a total package of under $15,000 annually (plus an old farm house as a pastorium and a pretty good pile of free groceries provided by the wonderful congregation) I opted out of Social Security due to a combination of influence from certain people and a heavy dose of plain stupidity. Soon thereafter, there was an opt-in window and I opted back in and have paid a ton of SECA taxes in the last 35 years.
I get a modest Social Security deposit every month these days. More significantly, MediCare has me feeling for the first time in a couple of decades that I actually have some decent comprehensive medical insurance, in case one of the medications I take like Xarelto ends up doing more harm than good. I would not want to be in the open market for health insurance these days.
Deal or no deal. There is no profit in lying to save a few thousand dollars. GuideStone offers some very stern advice on this. The definitive treatise for most of us on the moral question is from Russell Moore in 2010. He wrote,
Now, you may agree or disagree with whether Social Security is a good idea. You may believe Social Security is economically unstable. You may be convinced it won’t exist when you need it. You may think the entire project is unconstitutional and an illegitimate function of government. Whatever.
It doesn’t make one bit of difference when it comes to the ethics of this situation.
…
As you make this decision, ask yourself whether you plan to preach and teach your people that participating in Social Security (as payer or recipient) is a sin against God. If the “opt out” provision were revoked, would you willingly go to prison rather than pay the tax? And, would your prison time be because you saw the choice as between Christianity and idolatry?
If the answer to these questions is “no” (as it seems from your question), then you are not a conscientious objector to Social Security taxes. To then “opt out” of paying them would be to refuse to do precisely what Jesus commands us to do: pay taxes. It would also give reason for offense to the mission field you’re attempting to engage with the gospel. And, by turning a protection of conscience into a political statement or a pragmatic economic benefit, it would imperil religious liberty provisions for your brothers and sisters in Christ.
One wrinkle on the opt-out that I have seen is that some advisors are promoting schemes whereby clergy can both opt-out of taxes on clergy income and receive benefits. Better consult a lawyer and/or CPA before trying this. Wouldn’t be a bad idea to consult The Almighty as well, since such a person would declare his objection to benefits for taxation purposes but not for getting the checks or deposits.
Considerable percentages of the US populace say (a) church is too much about money, and (b) they don’t trust religious leaders. Were it to be broadcast that the local minister is free from SECA taxes while at the same time getting the benefits, those in the pews would likely be aghast. “The pastor isn’t like us, he pays no FICA or SECA taxes but he still gets the benefits. How is this either moral or fair?”
If I were 26 instead of 66, I would have no idea what life would be like in the year 2056. The way it looks, we Baby Boomers are going to suck up all the taxes paid by our children and grandchildren and their Social Security and MediCare benefits will be somewhat less than ours. I don’t wish that for my younger colleagues but, hey, you guys keep slaving away and paying your taxes so I can have some free or low cost health services…and the monthly deposit, of course.
I do know that lying will still be sinful and for that primary reason, stick some wax in your ears and don’t listen to the siren song of the opt-out.
Moore goes overboard. The IRS objector clause states that one has objection to receiving funds from the state for services performed as a minister, not that one is objecting to the idea of Social Security period.
A person can conscientiously object without believing it is a sin against God to pay into our receive funds from SSA or a similar program for other work done.
Mike, another article can explore any debate about the morals. I understand your point but don’t think it compelling. I’m glad Moore was very strong in his words and I think it beneficial that GS is very stern in their warnings on this.
I agree with Mike here, your congregation is not receiving their income as a minister, it is not equivalent to argue you must think it is sin for all to opt out.
Mike, I agree with you. I would further emphasize that this is a “conscientious objection” clause. I can conscientiously object to something and not do it, while recognizing that others may not have the same conscientious objection and not charge them with sinning because they do what I wouldn’t do.
That said, I don’t have this conscientious objection, and very few Baptist ministers I know of do. Anyone who goes this route should honestly conscientiously object and not be just doing it for financial reasons. That’s dishonest.
To anyone who has opted out of Social Security – you had better be seriously putting significant money in your GuideStone Retirement fund! When, and if, you get a raise, have them put all or most into your retirement fund. And you better have it in something that will, over time, grow significantly. Something like their Equity Index Fund that somewhat mirrors the S&P 500. You will need about 20 times your salary, to retire on your salary. So, if you are making $25,000 a year, and want that in retirement, you will need about $500,000 in your retirement. Really,… Read more »
We are retired, living pretty much the way we did when we were working, and we’re able to live within our Social Security income, barring any unusual purchases. And our SIMPLE Retirement Plan mandatory withdrawals either go into the bank or provide something like this year’s 11-day Panama Canal cruise.
I am glad I didn’t have the opportunity to opt out of Social Security. It would have been an immense mistake.
I think the point is, we should all opt out of SS, build a mega-church, write lucrative empowerment books, and retire in our “mansions over the hilltop.”
I’ve been attuned to this for a good many years. While it doesn’t come up in conversations much these days, when it does I don’t recall, ever, hearing any opt-outer express any objections other than that it is a burdensome tax to pay.
A number of people I respect have opted out and did so for what looked like good economic reasons at the time. Most of these regret the decision. Again, the conscientious objector statement is never mentioned.