By Martha Simmons
Correspondent, The Alabama Baptist
You’ve heeded the call to the ministry and have been called to a church. So far, so good.
Now you hear what one pastor termed “the siren’s song” to opt out of paying into Social Security. Should you? Most experts say no.
Special provision
Southern Baptist minister William Thornton addressed the issue in a 2016 article for the Southern Baptist Convention (SBC) Voices blog, noting that new ministers are often advised to avoid paying Social Security taxes by taking advantage of special IRS provision for ministers. Thornton recalled his own experience in the early days of his ministry.
“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.”
Thornton recognized the error of his ways and took advantage of an opt-in window granted by Congress, paying self-employment taxes for nearly four decades.
Now semi-retired, he said, “I get a modest Social Security deposit every month.”
The temptation is strong for young ministers to sign away their Social Security right or obligation, depending on one’s outlook.
The required opt-out declaration states:
“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.”
This declaration, signed under penalty of perjury, is a key part of “IRS Form 4361,” the application for exemption from self-exmployment taxes for ministers and certain specified others.
Sign it, submit it and one is forever free from paying quarterly federal self-employment taxes into Social Security on ministerial earnings.
But in gaining freedom from Social Security a minister may be chaining himself — and his family — to an unwise financial decision bearing repercussions for the rest of his life.
Plus the signer of the declaration might be lying to the federal government.
Russell Moore, president of the Ethics & Religious Liberty Commission of the SBC, addressed the opt-out issue in a 2010 response to a young Baptist minister asking whether it was ethical for him to avoid paying into the system by claiming to be a conscientious objector.
Jesus’ command
“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?” Moore wrote.
“If the answer to these questions is ‘no’ … 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.
“By turning a protection of conscience into a political statement or a pragmatic economic benefit it would imperil religious liberty provisions.”
Pulling the trigger on the Social Security opt-out provision is, according to GuideStone Financial Resources, an irreversible “decision of a lifetime.”
Congress has allowed ministers to opt back in only three times in the last 40 years, and no such provision is in place at this time.
Opting out of Social Security could mean forfeiting:
- Federal retirement benefits
- Subsidized Medicare
- Disability benefits
- Survivor benefits for loved ones
Most ministers who opted out ultimately regret it, Thornton said, quoting a GuideStone staffer who deals with low-income ministers in the firm’s charitable Mission: Dignity program.
Sufficient resources
“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,” the GuideStone employee said.
“Not one of our Mission: Dignity recipients has ever told me, in retrospect, that opting out of Social Security was a good idea.”
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