Clergy Act opens Social Security window for ministers

The U.S. Senate passed the Clergy Act (H.R. 227 / S. 639) Sept. 30. The House passed its version on April 27. The legislation now heads to President Donald Trump’s desk to be signed. Once signed into law, the bill is effective for taxable years beginning Jan. 1, 2029, and Jan. 1, 2030.

The Clergy Act creates a two-year window allowing eligible clergy members and Christian Science practitioners to reverse a previous, permanent decision to opt out of Social Security and Medicare taxes.

Roy Hayhurst, director of executive communications of the Southern Baptist Convention’s GuideStone Financial Resources, explained how ministers’ unique tax status affects their participation in Social Security and allows them to opt out under certain circumstances:

“Ministers have a dual tax status for federal income tax purposes. They are employees for federal income tax purposes but are treated as self-employed for purposes of Social Security,” Hayhurst explained.

“During the first two years of one’s ministry, a minister who, because of his faith principles is opposed to the acceptance of public insurance, can opt out. Unfortunately, because those quarterly Social Security payments can be daunting, some will opt out for financial reasons instead,” he continued.

“This deprives them, and their families, of the retirement and insurance benefits of Social Security,” he said.

The Ticket to Work and Work Incentives Improvement Act of 1999 allowed a temporary window for members of the clergy to revoke their Social Security exemption. That act provided a two-year re-enrollment window. Before that, the Tax Reform Act of 1986 also offered a limited revocation opportunity.

The Clergy Act provides a new, limited two-year window for clergy members to reverse a permanent opt-out from Social Security and Medicare, whereas previous permanent rules offered no way back in once the choice was made outside of rare historical amnesty windows.

Ministers get a second chance

GuideStone Financial Resources, a provider of specialized insurance and health plans for churches, ministries, and Christian nonprofit organizations, celebrated the passage of the Clergy Act in a press release, highlighting the efforts of its congressional co-sponsors: Representatives Vince Fong and Mike Thompson of California and Senators Katie Britt of Alabama and Maggie Hassan of New Hampshire.

“This legislation provides many eligible ministers an opportunity to strengthen their financial security and resilience as they prepare for retirement. Congressman Fong’s efforts will benefit pastors and ministry families for years to come,” Guidestone President Hance Dilbeck said in the press release.

GuideStone also highlighted its partnership with the Ethics & Religious Liberty Commission and collaboration with the Church Alliance—a coalition of large, historic church benefit boards advocating on behalf of churches, clergy, and ministry workers—in support of the Clergy Act.

“Southern Baptists care deeply about ensuring that our ministers and their families are cared for in retirement after their years of devoting themselves to God’s call to ministry,” ERLC President Evan Lenow said in the press release.  

John Litzler, general counsel for the Baptist General Convention of Texas, also expressed appreciation: “We are grateful to Congress for recognizing the needs of pastors and ministers and for passing the Clergy Act.

“For too long, many ministers were not even informed they had a choice when it came to opting out of Social Security. Often, it was explained to them as an exemption from Social Security, or it was not explained at all,” Litzler said.

“Once a minister opted out of Social Security, they were stuck with the consequences of that decision throughout their lives, as there was no way to reverse it,” he said.

“The Clergy Act provides ministers with a meaningful opportunity to receive wise counsel regarding future participation in Social Security and to make an informed decision about what is best for them and their families,” Litzler continued.

“We appreciate the hard work of GuideStone and the ERLC in advancing this legislation. We encourage pastors to take advantage of educational resources about the Clergy Act, so they can understand how it may benefit them.”

Financial planning resources

Guidestone said it plans to provide educational resources to help pastors, church staff, and ministry leaders understand the legislation and assess whether participation is appropriate for their individual circumstances if the act becomes law.

GuideStone recommends ministers not opt out of Social Security and said it regularly hears from ministers who previously opted out and later regretted the decision. The organization described the Clergy Act as an opportunity for ministers to revisit their decision and potentially strengthen their financial security and retirement resilience.

A brochure explaining why opting out is not the answer is available on GuideStone’s website, along with compensation planning resources to help churches and ministers understand their unique tax status.