Clergy Get Social Security Choice: New Bill Allows Opt-In Starting 2028

The Clergy Act lets ministers, members of religious orders, and Christian Science practitioners revoke prior exemptions from Social Security, offering a new choice about participating in the system.

Switching Gears

This bill, effective for tax years beginning after December 31, 2027, provides a way for clergy who previously opted out of Social Security to opt back in. To make the switch, an application must be filed by the due date of their second tax return after that date. If approved, the revocation is permanent—no going back to being exempt. The revocation can be effective for either the first or second tax year after December 31, 2027, and all subsequent years.

For example, if a minister files their 2028 taxes in April 2029, they have until April 2030 to file this application, potentially making it effective for 2028 or 2029. If the application is filed after the due date of the tax return for which it's intended to be effective, it must include full payment of the self-employment taxes that would have been due, as specified in Section 2 of the bill.

Real-World Impact

Imagine a pastor who initially opted out of Social Security, relying instead on a personal retirement plan. If that plan underperforms, this bill gives them a chance to join Social Security, providing an additional safety net. This affects not only their retirement but also potential disability and survivor benefits for their family. The change could mean greater financial security, but it also means paying self-employment taxes they previously avoided. This could impact their take-home pay, requiring careful budgeting.

Getting the Word Out

Section 3 of the Act requires the IRS and Social Security Administration to work together on an outreach plan. Within 90 days of the bill becoming law, they must present a strategy to the House Ways and Means Committee and the Senate Finance Committee to inform clergy about this new option. This is crucial because many clergy members may not be aware of this opportunity or understand the implications of revoking their exemption.

Challenges Ahead

While the bill offers flexibility, it also presents challenges. Clergy members need to carefully weigh the pros and cons of joining Social Security. It's a permanent decision with long-term financial consequences. The IRS and Social Security Administration also face the task of efficiently processing applications and ensuring everyone is informed. The bill essentially adds a new layer of administrative work, requiring clear communication and potentially new procedures to handle the influx of applications.