As a basis for the pension assessment, clergy compensation consists of cash salary, Social Security tax reimbursements, utilities, and housing.
- Cash salary is the stipend paid, including bonuses, one-time cash payments, tuition paid for dependents, severance and any salary reduction used to fund an annuity or other tax-deferred benefit, such as a TSA or 403(b) plan.
- Social Security tax reimbursement (SECA) is compensation provided to offset self-employment taxes.
- Utilities are allowances to cover the cost of utility bills, such as fuel, gas, and electricity, or the amount the church pays for utilities on a cleric's behalf.
- Housing is the allowance clergy receive for this purpose:
- If housing is provided rent-free, the housing allowance is assumed at 30% of the total of the cash stipend, Social Security reimbursements, and utilities.
- If both housing and meals are provided free of charge, the housing allowance is assumed at 40% of the total of the cash stipend, Social Security reimbursements, and utilities.
- If clergy receive a cash or housing equity allowance, the actual amount of the allowance will be used as of January 1, 2006.
- If housing is provided rent-free and clergy receive an additional cash housing allowance or housing equity allowance, for pension purposes the allowance is assumed at 30% of the total of the cash stipend, Social Security reimbursement, and utilities. The total compensation is then calculated to include both the assumed 30% housing allowance and the actual cash housing allowance or housing equity allowance.
- If clergy receive compensation from more than one church employer, but only one provides housing, compensation from all of qualified employers is assessed for a proportionate share of housing.