Compensation Form Instructions & Additional Information

THIS FORM IS UNDER CONSTRUCTION...STAY TUNED FOR MORE UPDATES.

 

This contains some basic instructions when filling out the Compensation Form:

* Main Contact Church - the church in the charge (or a single church) that has the largest % of the charge, and/or the church that serves as the contact for Guidestone (Guidestone will only bill one church in a charge, not more than one).

* Pastor Status - Please confirm this with the appropriate Presiding Elder.

* Effective Date - Usually compensation forms are done annually for ongoing appointments...They can be done, of course, for appointment changes as well. This field is designed such that a compensation form will be in effect until a new one is signed/dated.

* Total Percentage of Charge & Multi-Point Charge - These fields will drive conditional logic through the rest of the form. Please confirm these details with the appropriate Presiding Elder.

* Does the Church Provide a Parsonage - This field will also drive conditional logic through the rest of the form

* Health Insurance - See below for more information. The GMC mandates Guidestone Health for full-time clergy unless conditions for waiver can be met. Health insurance is not offered, at this time, for less than full-time clergy. In alignment with our total compensation philosophy, the amount of health covered in the total compensation should be determined by the clergy. The church will be billed for it, but any amounts not covered by the church can be payroll deducted.

* Optional FSA/HSA - Some Guidestone plans feature a FSA or HSA. There are built in and elective costs associated with them. These costs should be payroll deducted and are not included in the total compensation calculation. The clergy should advise the church as soon as these elections are made what the costs will be such that payroll can be properly setup.

* Amount of Long-Term Disability / Basic Life - This is also mandatory for 3/4 time appointments (total charge) and above. If the clergyperson has been established with the GMC and Guidestone previously, there should be a good billing history to give a solid estimate on this cost. If the clergyperson is new, rates are based on pension salary and age. Costs will not be accurately known until billed. An estimate of $1250 per year, however, should cover most clergypersons. Then, once the actual costs is known, pay can be adjusted accordingly. This cost is billed to the church and is included in the total compensation calculation.

* Housing Allowance - See below for more information. This is at the discretion of the clergy to help with their tax burden when they are providing their own housing. It is paid by the church (usually it's best to have it as a second item on the pay stub) but not included in Box 1 W-2 Income. Clergy must justify expenses against this income on their personal returns. This is included in total compensation and in the calculation of Pension Salary (without Parsonage)

* Base Salaries - Depending upon the number of churches in the charge, this could be from 1-3 numbers. They will be totaled into the Total Charge Salary field. These numbers are adjusted, considering other factors/elections, to get to the total charge compensation desired. These salaries are cash salaries paid (before payroll deductions).

* Clergy Pension Waiver - Participation in Pension, also through the Guidestone EAP, is mandatory for 1/2 time appointments and above. A waiver is being worked on, however, at the denominational level for certain scenarios. Stay tuned for more information.

* Pension Salary - This will show, depending upon prior selections, as either with Parsonage or without Parsonage. In the case of no parsonage, this amount is total salary plus housing allowance. In the case of a parsonage, it is total salary X 1.25 (this is a historic calculation that has been in place for quite some time in such industries). IMPORTANT: This amount is what should be entered in the Guidestone EAP as salary. It is NOT what is paid but what pension and LTD/Life benefits are based upon.

* Pastor Personal Pension/Base Pension/Matching Pension - Any pastor personal pension selected by the pastor should be payroll deducted and is not included in the total compensation calculation. Base pension is 5% of pension salary. Base and matching pension amounts are billed to and paid by the church and DO count in total compensation, thereby reducing salary. The amounts of these lines are entered in the Guidestone EAP by the church/charge EAP administrator.

* Accountable Reimbursement Plan Amount - Optional at the discretion of the clergy. It can be benficial with tax burden. See below for more information. This is counted toward total compensation as it's a cost the church ultimately pays (with proper accounting). In the event the entire amount is not spent in a year, we recommend the remainder be paid to the clergy as a taxable disbursement. 

* Housing Exclusion - See below. This doesn't church anything and the clergy must justify what they claim on their return(s). However, the IRS requires consent of the church for this claim.

* Moving Costs - coverage of any moving costs is part of the negotiation of an appointment between the Presiding Elder, church, and clergy. Any moving costs paid by the church are taxable to the clergy (a law that changed a few years back) and that is why it is included here. This amount is routinely one-time, negotiated, and is not included in total compensation.

 

 

 

Housing Allowance / Exclusion Additional Information

 

What is the purpose of this form? The Internal Revenue Code Section 107 has a provision that allows ministers of the Gospel to exclude from their reportable
income some costs of living in a parsonage (exclusion) or their own home (allowance). This tab and the signatures on the worksheet provide the resolution
necessary to use this advantage.

Does this cost the church anything? In the event of housing allowance, yes, it is considered part of total compensation. In the event of Housing Exclusion, no. The total compensation is not changed and this requires no additional cash paid. It merely designates a portion of the total compensation allowed/excluded from reportable W2 income.

When should this form be completed/signed? At least annually and whenever there is a pastoral change. This form must be done proactively, not retroactively.
If the clergy person(s) is examined by the IRS, these SIGNED forms must be in place for any allowance/exclusion.

How much should the exclusion be? The pastor establishes the amount in consultation with the church and their tax professionals. For a church-owned parsonage, the amount should not exceed the fair rental value of the parsonage. A rule of thumb for the annual "fair rental value" is to take 5%-8% of the market value of the parsonage. A professional agent/appraiser can perform a fair rental value assessment as well. If a housing allowance is paid to the clergy, the exclusion amount can include all sorts of things (see below). It's advisable to estimate high…As stated elsewhere, more cannot be excluded than is on this form…but less can. If
at the end of the year, the total amount allowed/excluded has not been incurred, it is morally incumbant upon the pastor to accurately reflect that on their return,
with the help of their tax professional. All expenses incurred for an allowance/exclusion MUST be documented.

What may be included in the exclusion? Any expense the clergy may incur in living in the parsonage or home. The following is a partial listing and is not exhaustive.
ONLY COSTS ACTUALLY INCURRED AND THAT HAVE NOT BEEN REIMBURSED MAY BE EXCLUDED. AGAIN, THE CLERGY TAX RETURN MUST BE ACCURATE
PLEASE CONSULT TAX PROFESSIONALS FOR FINAL ADVISE.

1. Rent or principal payments, the cost of buying a home, and down payments.
2. Real estate taxes and mortgage interest for the home.
3. Home insurance or renters insurance.
4. Improvements, repairs, and upkeep of the home (NOT MAID SERVICES) or contents. New roofing, room additions, carports, etc.
5. Furnishings and appliances: dishwasher, vacuum, electronics, washer, dryer, sewing machine, cookware, etc.
6. Decorator items: drapes, rugs, pictures, paint, wallpaper, sheets, towels, etc.
7. Utilities (again, only those paid by the clergy)
8. Miscellaneous: Cleaning supplies, light bulbs, lawnmower, tools, etc. Again, NOT MAID SERVICE or any other hired maintenance labor.

Accountable Reimbursement Plan Additional Information

The church recognizes that certain expenses of ministry paid by the pastor are
part of the ordinary cost of ministry. We therefore establish an Account Reimburseable Plan (ARP) to defray these expenses. The ARP shall be an annual line item in the Church budget. The ARP for this charge is listed above.

1. The pastor/staff shall be reimbursed from this reimbursement account for their reasonable business expenses incurred during the performance of their ministry duties.

2. The designated person at the church must be given an adequate account of each expense, including but not limited to a statement of expenses, showing the amount, date, place, business purpose, mileage, etc. Appropriate supporting
documentation must be attached to each report. Mileage between the pastor's home and the church office shall not be reimbursed. Copies of all documentary evidence and submitted reports shall be retained by both the pastor/staff and the church. The designated person at the church is responsible for approving submitted expenses. Questions or disputes should be brought to the appropriate SPR, Finance, and/or other persons or committees designated by church leadership.

3. Reimbursements are routinely paid after expenses are incurred. However, should circumstances dictate an advance payment, the pastor/staff must promptly account for the advance (~30 days) and return any excess.

4. Any unspent budgeted amounts that are paid as a salary bonus are taxable to the pastor/staff and must be reported as part of the compensation of the pastor/staff.

This amount is reduced from total compensation when calculating salary and the amount of the ARP should be determined by the pastor in consultation with the church/charge.

 

Health Insurance Additional Information

The Global Methodist Church provides health insurance for eligible clergy and lay employees of local Global Methodist congregations in the United States through Guidestone (gmchurch@guidestone.org). Each church must go through the process of setting up an account in the Employer Acces Portal (EAP). The EAP is where salaries and pension amounts are set. There is no longer a pension form sent to the GMC benefits team, this is done through the EAP by each church/billing unit. The benefits team & Guidestone are available to help and answer questions.

2024/2025 Rates vary depending upon the plan(s) selected. In the body of the comp form, I have included the rates for the Health Choice 5000 in the formulas. But, these can be adjusted by the church/clergy. THE CHURCH AND THE THE CLERGY PERSON(S) MUST DISCUSS WHAT AMOUNT THE CHURCH IS WILLING TO COVER AND THE CLERGY PERSON SHOULD INFORM THE CHURCH OF THE PLANS/RATES THEY'VE SELECTED AFTER ENROLLMENT. The clergy also need to inform the church of dental, vision, and HSA/Flex elections and any other elections that will be billed. Because the church is billed (and pays) through EAP, we're including this on the calculation for total compensation.