Compensation and Staffing News |
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UUA Office of Church Staff Finances Mission
Guided by the values of our faith,
we equip congregations for excellence as employers
and their staff for financial competence and well-being.
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August 2020
In some email readers, you may need to click on continuation dots to read the entirety of each article.
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In Lieu of FICA Demystified |
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Even though your minister is an employee, they are considered self-employed with respect to Social Security/Medicare tax payments. This is called "dual tax status."
The Social Security/Medicare tax is currently 15.3% of wages. Ordinarily, this cost is shared evenly between employer and employee in the form of the FICA (Federal Insurance Contributions Act) tax. The employer pays 7.65% and the employee pays the other 7.65% via payroll deduction. But self-employed individuals, since they have no employer, are responsible for paying the entire 15.3% of wages themselves; this is the SECA (Self-Employment Contributions Act) tax.
Because ministers are treated as self-employed for Social Security/Medicare purposes, they pay the full 15.3% of salary and housing, rather than sharing the cost with their congregation – and they must pay it directly themselves, just like other self-employed workers.
Let's look at what this means with respect to $100 in wages:
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Non-ministerial staff: Your congregation and your non-ministerial staff each pay $7.65, for a total of $15.30 in FICA taxes.
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Ministers: The minister pays $15.30 in SECA tax. The congregation pays nothing.
Notice that ministers lose more of their pay to the Social Security/Medicare tax than do their non-clergy counterparts. Meanwhile, the congregation saves money. This is where the Payment in Lieu of FICA comes in.
Sometimes called the Self-Employment Tax Offset, the Payment in Lieu of FICA compensates the minister for the extra Social Security/Medicare tax they are paying relative to other staff. (Because the payment is itself taxable income, the minister doesn't come out exactly even, but close.) This offset is equal to what the congregation would have paid in FICA tax for a non-ministerial employee earning the same salary (including housing), so the overall cost to the congregation is the same as it would be for any other employee. The UUA is among a number of denominations that recommend including this payment in the minister's compensation; UUA Salary Recommendations for ministers are based on the assumption that they will also receive the Payment in Lieu of FICA.
Important In Lieu of FICA Reminders
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Per IRS law, congregations are prohibited from withholding and remitting Social Security/Medicare taxes for their minister. Your minister must pay the SECA tax directly.
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The minister's self-employment tax is based on salary + housing, not just the salary portion, so the offset payment should be calculated on salary + housing, as well.
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The offset payment is included in UU Retirement Plan calculations unless the congregation has specifically opted to exclude it on their Employer Participation Agreement. (See Election #4.)
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The offset payment is not included when calculating Life/Long-Term Disability premiums.
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Ministerial Transitions in the COVID-19 Era |
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The State of the Search Process and Ministerial Transitions
You can thank interim ministry.
Interim Ministry search has been virtual for over a decade – via video conferencing and electronic communication. As a result, other ministerial searches had a model on which they could build. We have adapted. And the settled search process will follow the same timeline as in previous years. Virtual options have been laid out (If Your Settled Search Needs to be Virtual), including great ideas from congregational leaders who carried out virtual searches in the spring. Some long-term change may come out of this that helps congregations reduce the cost of search by continuing with virtual options. Search and relocation are often as much as $15,000 a piece, a huge hit in a congregation’s yearly budget.
What Else is New & Who Does What
- Christine Purcell, from the Congregational Life staff group, works with congregations on prepping for ministerial search, from an overview to fees to good coaching. She assigns coaches to work with search committees. She coordinates Congregational Life staff’s efforts on exit interviews, reference checking, and general support.
- Rev. Patrice Curtis, hired to work in the Transitions Office earlier this year, works on issues of equity and inclusion in ministerial transitions and assists interim ministers with change and anti-oppression work.
- Jan Gartner, Rev. Richard Nugent, and Rev. Keith Kron are working to provide suggested modifications to the UUA's recommended model ministerial agreement for full-time solo ministers to make it appropriate for other ministries.
- Emily Cherry provides administrative and technical help to congregations and ministers (including all web updates).
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Keith Kron has started a blog following a fictional congregation and ministers through the settled search process which addresses typical concerns that arise as well as providing reframing and learnings from 10 years of overseeing the search process: Sliding Doors Blog.
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The MinstrySearch system will now list any job opening a congregation wishes to post, whether it be in religious education, administration, ministry, or any other area.
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HR During Virtual Operations |
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As congregations move into extended virtual operations, new questions have arisen about compensation and payroll, personnel administration, and more. Our new LeaderLab article, Human Resources Questions about Virtual Operations, addresses some of the questions we've received. We will continue to add to this page as topics emerge.
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UUA Office of Church Staff Finances
24 Farnsworth Street | Boston, MA 02210
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