You gave your life to the church. Your financial plan deserves the same care.
Most financial advisors have never worked with a PC(USA) pastor. The housing allowance, the Board of Pensions, the dual tax status: these aren’t footnotes. They’re the foundation of every decision you make about money. Koinos was built for people who chose their work on purpose. That includes you.
The 2025 Benefits Plan changed things. Here’s what it means for your money.
If you were in Pastor’s Participation as of December 31, 2024, you’re in Transitional Pastor’s Participation through 2027. The dues structure stays the same for now (non-contributory, paid entirely by your congregation), but it sunsets January 1, 2028, when you’ll move to the Congregational Pastors Package. That transition has financial implications worth thinking through before it happens.
The PC(USA) Board of Pensions redesigned the Benefits Plan effective January 1, 2025, the first major restructure in 40 years. The old plan was built for a different denomination: mostly male, married with children, in installed positions at congregations that could afford the full Pastor’s Participation dues. That’s no longer most of the church, and the Board knows it.
The new structure, three packages instead of one, gives congregations more flexibility and pastors more options. But flexibility also means more decisions, and more decisions mean more chances for the wrong one to cost you.
The three packages are:
Congregational Pastors Package: required for installed pastors. Medical coverage for the pastor, plus income protection. Family coverage is optional and contributory.
Covenant Package: pension, death and disability for any employee 20+ hours per week. No medical.
Transitional Pastor’s Participation: bridge package through 2027 for pastors who were in Pastor’s Participation at the end of 2024.
What Koinos helps PC(USA) pastors figure out.
Housing allowance: the decision that happens before January 1st
The housing allowance exclusion can save an ordained pastor thousands of dollars in federal income tax every year. But it only works if the church designates the amount in advance, in writing, before you earn it, through a Session resolution included in the congregational meeting minutes. Miss that window and you can’t go back. The IRS doesn’t allow retroactive designations.
The amount you can actually exclude is the lesser of three figures: what the church designated, what you actually spent on housing, or the fair rental value of your home furnished with utilities. Keeping a simple record of housing expenses each year (mortgage or rent, insurance, taxes, utilities, repairs) protects you and lets you set the right designation number the following year.
One thing that surprises a lot of pastors: the housing allowance exclusion only applies to federal income tax. For Social Security and Medicare purposes, housing allowance is income. You pay self-employment tax on it.
On pension distributions: If you are a pastor of the Word and Sacrament, you may be able to exclude all or part of your Board of Pensions defined benefit payments from taxable income as a housing allowance in retirement, provided you’re still ordained and the amounts don’t exceed actual housing expenses or fair rental value. This is one of the most underused benefits available to retired PC(USA) pastors.
Dual tax status: the bill that surprises most first-call pastors
Your church gives you a W-2. But unlike every other W-2 employee, you pay both the employee and employer share of Social Security and Medicare: the full 15.3% self-employment tax on the first $176,100 of net earnings in 2025. Most churches don’t withhold income tax from pastoral pay, either. That combination means April can arrive with a large bill if you haven’t been making quarterly estimated payments throughout the year.
Some congregations gross up salary to help cover the SE tax. Most don’t. Getting the quarterly estimated payment calculation right (accounting for income tax, self-employment tax, and the housing allowance exclusion together) is one of the first things Koinos helps a new client sort out. Done right, it removes the April surprise entirely.
On the SE tax exemption (Form 4361): A pastor may apply for an exemption from self-employment tax on grounds of conscientious opposition to public insurance for reasons of religious principle. This exemption is permanent and irrevocable once filed. It forfeits Social Security retirement and disability benefits for the rest of your life. It is rarely the right choice. If someone has suggested it to you as a tax savings strategy, get a second opinion before you file anything.
The Board of Pensions pension: what it will actually pay you
The PC(USA) Defined Benefit Pension Plan pays a monthly benefit in retirement based on your total accrued pension credits, which grow each year you’re enrolled as an active member. The pension amount depends on how many credits you’ve accrued, how old you are when you retire, and the payment option you choose.
Gaps matter: years when your congregation didn’t pay dues, or paid late, don’t accrue credits. The Board will notify you before coverage lapses for nonpayment, but following up is your responsibility. Checking your annual benefits statement to confirm your effective salary is recorded correctly is the single most underrated annual task in pastoral financial planning. An error there compounds quietly over a career.
The Board has granted a pension apportionment, a permanent, Board-approved cost of living increase, for 13 consecutive years through 2025, a cumulative increase of 53.4% since 2013. That’s a strong track record. But it’s not guaranteed, and your retirement income plan shouldn’t assume it will continue indefinitely.
The Retirement Savings Plan: why the 403(b)(9) matters more for pastors than for anyone else
The Board of Pensions Retirement Savings Plan is a 403(b)(9) church plan, and the 403(b)(9) designation matters. Distributions from a 403(b)(9) plan can be designated as housing allowance by a retired ordained pastor, potentially excluding them from federal income tax when withdrawn. This makes the Retirement Savings Plan a more tax-efficient vehicle than a standard 403(b) or IRA for pastors who intend to remain ordained into retirement.
How much to contribute, whether to use pre-tax or Roth, and how to coordinate the Retirement Savings Plan with the defined benefit pension and Social Security timing: these questions have real dollar answers. They just depend on your specific picture. That’s what the planning is for.
The Social Security Fairness Act: if you were told to expect less, recalculate
The Social Security Fairness Act, signed into law January 5, 2025, eliminated the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). These provisions had reduced or eliminated Social Security benefits for people who also received a pension from work not covered by Social Security.
If you paid into Social Security during your career but also receive the Board of Pensions defined benefit pension, the WEP may have reduced your Social Security benefit. Under the new law, that reduction goes away retroactively to January 2024. If you’re already receiving Social Security, you should see increased payments. If you haven’t filed yet, the elimination of WEP and GPO changes the calculus on when to claim.
If a financial planner or Social Security advisor told you in the past to expect a reduced benefit because of your Board of Pensions pension, that number needs to be recalculated. The law changed. Your projected retirement income may be higher than you thought.
Pastor’s Bridge Coverage: when you’re between calls
If you leave active service and are seeking a new call, you may continue enrollment in the Benefits Plan for up to 24 months through Ministers Bridge Coverage, at your own cost. You can continue the benefits you had immediately before your change in employment status, but you can’t add coverage you didn’t have.
If you pay dues for pension coverage during Bridge Coverage, you continue accruing pension credits. If you pay medical dues only and skip pension dues, you don’t. That’s a meaningful difference over a long transition, and the right call depends on how close you are to retirement and what your pension credit picture looks like.
Manse housing: the tax you’re paying and the equity you’re not building
If your congregation provides a manse instead of a housing allowance, the fair rental value of that housing, furnished, with utilities, is excluded from your federal income tax. But it’s not excluded from self-employment tax. You pay SE tax on the fair rental value even though you never receive that money as cash.
Many pastors living in manses underestimate their SE tax liability because of this. The fair rental value in your area may be higher than you expect, especially in markets where housing costs have risen.
The other manse question that comes up less often but matters more: what happens at retirement? A pastor who has lived in church housing throughout their career may leave with no home equity. Planning for that transition, through savings, investment, or deliberate decisions about homeownership, is easier to do at 45 than at 62.
Effective salary: check this number once a year, every year
Your effective salary as recorded by the Board of Pensions drives your pension accrual, your death and disability coverage, and your dues. If it’s wrong, too low because a raise was reported late, or because housing allowance wasn’t included correctly, the error compounds over your career.
Pull up your annual benefits statement. Find the effective salary the Board has on file. If it doesn’t match what you actually earned, including housing allowance, call 800-PRESPLAN (800-773-7752) and get it corrected before another year goes by.
PC(USA) pastors Koinos works with.
Pastors in their first call: getting the housing allowance designation right from day one, understanding what the Board of Pensions provides and what it doesn’t, and starting quarterly estimated tax payments before April finds them unprepared.
Mid-career pastors: reviewing their effective salary on file, making sure they’re contributing enough to the Retirement Savings Plan, and thinking seriously about what the pension plus Social Security plus the 403(b)(9) actually adds up to at 67.
Pastors approaching retirement: coordinating Board of Pensions pension payments, Social Security timing (now revised by the Fairness Act), 403(b)(9) distribution strategy, and whether housing allowance exclusion continues in retirement.
Pastors navigating the 2025 Benefits Plan: who want to understand what Transitional Pastor’s Participation means for their situation and what choices they’ll face before 2028.
Pastors between calls: thinking through Ministers Bridge Coverage, pension credits during transition, and how to manage cash flow during a search.
Pastors living in a manse: who haven’t thought through the SE tax on fair rental value, or what housing looks like when they retire.
This work doesn’t require you to be in Boise.
Koinos is in Boise, but this work isn’t. The Board of Pensions, the housing allowance, the 403(b)(9): these are the same questions whether you’re in Idaho or Georgia. We meet by video or phone. Bring the question.
What Koinos does and doesn’t do: Koinos provides financial planning coordination, not tax preparation or legal advice. The tax topics on this page involve complex federal rules that interact with individual facts and circumstances. Koinos works alongside your tax preparer to flag issues, run scenarios, and inform decisions, but the tax filing itself belongs with a CPA or attorney who knows clergy tax. A good starting point: the annual Church & Clergy Tax Guide by Richard Hammar, published by Christianity Today, and the Board of Pensions’ own tax resources at pensions.org.