Did you know that a minister can opt out of Social Security under a unique provision in the Social Security code? This sounds like a dream come true and an option many in the U.S. would like to have with the current uncertainty in the program.
Young ministers have an important tax decision within their first two years of ministry. Should they opt out of social security (for ministerial income only)? This decision will have a huge impact on their earnings potential and financial future.
History of Opting Out of Social Security for Clergy
How did this exemption for clergy to opt out of SS begin? It was a series of smaller steps until the modern exemption system was now in place:
- 1951 Non-profit workers were given the option of entering the Social Security system. This caused a debate over whether ministers were self employed or employes of the church/denomination.
- 1955 Those ministers whose denominations classisifed them as self-employed were given the option of joining the Social Security system, providing they (not their church) paid the full self employment tax.
- 1968 Ministers were required to enter the Social Security system providing a provision they could opt of based on religious principals in their first 2 years of ministry. This sets up the modern dilemma for young clergy members.
The Ethics of Ministers Opting Out of Social Security
When a young minister looks at this issue, the advice is varied and the ethics involved are not black and white. This is a controversial issue with both sides giving valid reasons for staying in the Social Security system or opting out.
Dave Ramsey looks at it from a financial and stewardship perspective. His main argument is that the individual, not the government can be a better steward of the money–and should thus opt out if Biblical grounds exist. His perspective does avoid the moral wording of the text that must be signed and doesn’t advise on the biblical principal on which ministers should opt out–at least not in print.
Russell Moore, Dean of Theology at Southern Baptist Seminary, gives an alternative point. He asks ministers to consider their beliefs about the public issues of insurance and if they really have a Biblical and moral conviction for this stance as a conscientious objector.
“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?”- R. Moore
Others view exists and can be found (read the comments in above mentioned articles) within certain Christian denominations and traditions. It is important to consider exempting from Social Security based on history, theology, and the tax law.—NOT on personal or political beliefs.
The wording of the modern tax form that clergy must sign has been refined in recent years and should be examined closely.
Sign on the Dotted Line: Opting Out of Social Security
The instructions for opting out of self employment are based only on religious views and not personal or political views on government or the Social Security system.
“This application must be based on your religious or conscientious opposition to the acceptance of any public insurance that makes payments for death, disability, old age, or retirement; or that makes payments for the cost of, or provides services for, medical care, including any insurance benefits established by the Social Security Act.”- form 4361 (2011)
The below is the excerpt from form 4361 (2011) that must be signed by the clergy member:
I certify that I am conscientiously opposed to, or because of my religious principles I am opposed to, the acceptance (for services I perform as a minister, member of a religious order not under a vow of poverty, or Christian Science practitioner) 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. (Public insurance includes insurance systems established by the Social Security Act.) I certify that as a duly ordained, commissioned, or licensed minister of a church or a member of a religious order not under a vow of poverty, I have informed the ordaining, commissioning, or licensing body of my church or order that I am conscientiously opposed to, or because of religious principles I am opposed to, the acceptance (for services I perform as a minister or as a member of a religious order) 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, including the benefits of any insurance system established by the Social Security Act. I certify that I have never filed Form 2031 to revoke a previous exemption from social security coverage on earnings as a minister, member of a religious order not under a vow of poverty, or Christian Science practitioner. I request to be exempted from paying self-employment tax on my earnings from services as a minister, member of a religious order not under a vow of poverty, or Christian Science practitioner, under section 1402(e) of the Internal Revenue Code. I understand that the exemption, if granted, will apply only to these earnings. 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.
After reading this form, I suggest praying and consulting several ministers and a tax professional who works with clergy about their view of signing form 4361 before signing.
*Note that your exemption must be approved by the IRS before the April 15th deadline and you must inform your ordaining body that you object of receiving public insurance. The minister also only has 2 years in which to sign the form and opt out.
If you do sign and opt out of Social Security, realize your need to prepare accordingly since you won’t have access to SS retirement, SS disability, FEMA, Pell Grants, etc from the government.
Have you struggled with this issue of opting out as a clergy member? What are your thoughts about ministers opting out of Social Security?