There are two types of changes in determining includible compensation for the most recent year of service. They are:
- Changes in how the includible compensation of foreign missionaries and self-employed ministers is figured, and
- A change to the years that are counted when figuring the most recent year of service for church employees and self-employed ministers.
Includible compensation is figured differently for foreign missionaries and self-employed ministers.taxmap/pubs/p571-016.htm#en_us_publink1000129445
If you are a foreign missionary, your includible compensation does not include contributions made by the church during the year to your 403(b) account.
If you are a foreign missionary, and your adjusted gross income is $17,000 or less, contributions to your 403(b) account will not be treated as exceeding the limit on annual additions if the contributions are not in excess of $3,000.
You are a foreign missionary if you are either a layperson or a duly ordained, commissioned, or licensed minister of a church and you meet both of the following requirements.
- You are an employee of a church or convention or association of churches.
- You are performing services for the church outside the United States.
If you are a self-employed minister, you are treated as an employee of a tax-exempt organization that is a qualified employer. Your includible compensation is your net earnings from your ministry minus the contributions made to the retirement plan on your behalf and the deduction for one-half of the self-employment tax. taxmap/pubs/p571-016.htm#en_us_publink1000129447
Generally, only service with the employer who maintains your 403(b) account can be counted when figuring your limit on annual additions.taxmap/pubs/p571-016.htm#en_us_publink1000129448
If you are a church employee, treat all of your years of service as an employee of a church or a convention or association of churches as years of service with one employer.taxmap/pubs/p571-016.htm#en_us_publink1000129449
If you are a self-employed minister, your years of service include full and part years during which you were self-employed.