Key Points
- Many pastors regret opting out of Social Security.
- Form 4361 is a lifetime exemption.
- The newly passed Clergy Act will give ministers two years to revoke their exemption.
Over the last decade, I have heard many heartbreaking stories. The pastor in her sixties whose husband died of coronavirus, leaving her with no income, no savings, and no Social Security since they both opted out. The pastor at the end of his career, working construction on the side to earn enough credits for Medicare benefits. The daughter whose 80-year-old pastor father opted out, and now he and his wife are completely destitute. Many struggling pastors looking for options, saying they had no idea what they were doing when they requested an exemption in their early twenties.
My heart goes out to them. Many young ministers opt out of Social Security without knowing what they are doing. Someone handed them a paper and told them to sign it. It was framed as part of their financial benefits in ministry. Another pastor warned them that paying SECA taxes would break them. Dave Ramsey said that sending money to the Social Security office is a bad way to manage your money for God.
There are many reasons that ministers opt out of Social Security, but there’s only supposed to be one. The only valid, legal reason to submit Form 4361 to apply for exemption from self-employment tax is if you are conscientiously opposed to “the acceptance 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.”
I had a friend once tell me, “I opted out, but now that I actually understand it, I don’t think I could sign my name to that statement and opt out again.”
There are many pastors who regret opting out, either for financial reasons or reasons of conscience. And there’s usually nothing they can do about it. Form 4361 is a permanent exemption for all ministerial income. It doesn’t matter if you change churches, change denominations, or change your mind. You’ve made a lifetime decision.
But now there’s a way out.
What Does the Clergy Act Say?
Congress just agreed to crack open the door back into Social Security for a limited time. This is a big deal. Congress hasn’t done this since back when we were all worrying about the world coming to an end on 1/1/00. (Though if you see young people running around today in baggy pants and crop tops, you may think it’s still 1999.)
Back in July, I told you about a bill in Congress that would let pastors opt back into Social Security. Well, I’m pleased to let you know that it was signed into law on October 20, 2026. It actually passed the Senate unanimously, which is an amazing feat in and of itself.
The Clergy Act (H.R. 227) creates a two-year window in which pastors can change their mind about opting out of Social Security. Pastors may be able to start paying in again as early as 2028. At least that is what one official government publication says; others say it will be for the 2029 and 2030 tax years. Either way, it’s not immediate. The deadline to revoke the exemption will be the due date for the 2030 tax return, which is usually April 15, 2031.
The reason everything isn’t clear yet is that Congress just passed this to the IRS to figure out how it will work in practice. You see, Congress is like a visionary senior pastor, while the IRS is like the associate pastor or administrative assistant who has to make the vision come to life while constrained by reality. It takes some time to figure out how a law will actually work in practice.
Likely, there will be a form that you need to fill out and have approved. At least, that’s what they’ve done in the past. We will keep you posted as things come to light.
Are You Considering Opting Back In to Social Security?
While the IRS is figuring out forms, you need to start considering your options. Do you want to keep your exemption, or do you want to revoke it? Whichever you choose will be a permanent decision that affects all of your ministerial income.
Take some time to consider your options and pray about it. Remember, this decision was and is supposed to come solely from your conscience. Do you have a sincere conscientious objection? The answer to that should make your next step clear.
What Happens if You Opt Back In to Social Security?
Opting back into Social Security doesn’t automatically grant you retirement or disability benefits. That’s not how it works. Rather, it lets you pay into the system to start to earn benefits.
In order to receive retirement benefits, you need to have earned at least 40 credits, and you can only earn up to four per year. For disability benefits, you have to have earned a certain number of credits within a certain number of recent years (the specifics depend on your age). Medicare benefits also require 40 credits. For a review of how Social Security works, I recommend reading this article.
This is a new opportunity that may be life-changing for some pastors. Please pass on the news!
