Paul McWilliams is a pastor’s kid turned financial advisor specializing in helping pastors and churches make wise financial decisions that align with their mission.



Many pastors spend the early years of ministry pouring everything into their calling—often at great personal sacrifice. They plant churches, lead with limited or no salary, and make do without retirement benefits because the church simply isn’t in a position to offer them.

Fast-forward 20 or 30 years, and those same pastors are heading toward retirement with little saved and not much time left to catch up.

Here’s the good news: your church may be able to help in a very meaningful way—without breaking any IRS rules—through something called a Non-Electing Church 403(b) plan.

Why This Matters

Churches have a unique opportunity to make tax-advantaged contributions directly into a pastor’s retirement account. This isn’t just theory—it’s built into IRS rules specifically for churches.


Even better, these contributions:

• Are not subject to Social Security or Medicare taxes (SECA/FICA),
• Grow tax-deferred, and
• Can often be distributed in retirement as a housing allowance—potentially tax-free.

That’s a triple tax benefit that can make a real difference for someone who spent decades serving the church.

A Chance to “Make It Right”

If your church has a founding or long-serving pastor who never had the chance to build retirement savings, a Non-Electing Church 403(b) allows you to contribute significant amounts—while they’re still on payroll—to help them catch up.

Example:
Pastor Adam planted a church 25 years ago, earning very little in the early years. Today the church is financially healthy, but Pastor Adam (now 62) has minimal retirement savings. By making regular church-funded contributions into a 403(b) plan before he retires, the church can help build a nest egg to honor his decades of service.

The key is timing: these contributions can only be made while the pastor is still employed. Once they retire or leave payroll, the window closes.

What Churches Can Do

Here are practical steps your board or finance team can take:

• Check your plan. Make sure your church’s 403(b) is set up as a Non-Electing Church Plan (many denominational plans already are).
• Review your budget. Even partial contributions add up over time.
• Start the conversation. Pastors often don’t know this is even an option.
• Work with a professional. A financial advisor familiar with clergy tax law can help you stay compliant and maximize the benefit.
  
  

Final Thought

Retirement planning is often overlooked in ministry, but it doesn’t have to be. Your church has the ability—and in many cases, the resources—to help faithful pastors finish well. Even modest contributions today can become a blessing for years to come.