Wise salary packaging encouraged

Wise salary packaging encouraged

It happens every year all over the country — budget committees meet to decide salary and benefits for their pastors and other staff members and employees. 
   
In small and large churches, committees wrestle with the tough questions of providing their staff adequate salary, insurance coverage, retirement and other benefits.
   
Too often churches find it more convenient to use a “package” approach and give their pastor a lump sum of money, thus requiring the minister to then plan and pay for his benefits out of his own pocket. 
   
With today’s rising costs and the complexity of insurance programs, investment plans, taxes and retirement planning, the minister is often placed in the difficult position of deciding where and how to provide his own and his family’s benefits.
   
GuideStone Financial Resources is sensitive to the complexity of this issue, President O.S. Hawkins said.
   
“We encourage church budget committees to consider restructuring salary packages in order to provide the pastor and church employees adequate pay while the church takes on the responsibility for funding the cost of protection and retirement benefits,” Hawkins said. 
   
“To simply provide a lump sum of money and then require the minister to cover the cost of benefits out of that sum is a disservice to the minister and to the church, and often a pastor discovers he doesn’t have enough money for adequate coverage. This can also leave the church in a vulnerable position,” he added.
   
Another issue to consider when structuring salary packages is taxes.
   
Bob Henry, head of GuideStone’s church retirement marketing department, noted, “Many churches are discovering that by simply restructuring the way they provide their ‘salary package’ they can save their minister a significant amount of self-employment and income tax, which can result in additional disposable income. 
   
“For example, by restructuring the salary package to separate salary and housing from benefits, a pastor whose salary package is $40,000 could save over $2,000 in taxes. How a church pays its employees is often as important as the amount of money the church pays them,” Henry said.
   
Today many churches are discovering the distinct advantages of using a step-by-step budget approach to achieve sound financial planning, benefiting the church and church staff members alike. 
   
Clearly written policies about ministry-related expenses and benefits relieve unnecessary worry and stress for ministers and their staff.
   
GuideStone offers church budget committees a resource, the Planning Financial Support workbook, which provides a step-by-step budget plan that is easy to follow and includes sample policies and forms.
   
The workbook cites six steps to financial support planning:
   
• Determine the needs.
• Establish written financial support policies.
• Provide for ministry-related expenses.
• Provide employee benefits.
• Determine personal income.
• Complete a financial support worksheet.
   
“The Planning Financial Support workbook is a free resource and one of the most valuable tools available to our local churches and the pastors standing at the crossroads,” Henry said. 
    The workbook can be ordered by calling 1-800-262-0511 or by visiting GuideStone’s Web site at www.GuideStone.org. (BP)