Retirement plan contributions made by the church on behalf of the minister or a church-related employee are not required to be reported at all on Form W-2. In addition, amounts contributed to the retirement plan by a salary reduction agreement are also not includible in Box 1 on the W-2 form as wages. However, on Form W-2 the “retirement plan” box should be checked on line 13. In addition, any amount contributed by salary reduction agreement should be reported in Box 12 of the W-2 form, using the code “E”. For example, if a minister reduced his salary by $5,000 to make contributions to his retirement account, that amount would not be included in Box 1 of the W-2, but “retirement plan” would be checked in Box 13 and Box 12 would report “E – $5000.00.”
As an additional note, church treasurers should be aware that retirement plan contributions made by the church are not considered wages for Social Security tax purposes. In addition, two separate Revenue Rulings (see Revenue Ruling 68-395 and Revenue Ruling 78-6) seem to suggest that even salary reduction retirement contributions made by ministers do not necessarily constitute self-employment earnings for purposes of determining Social Security tax liability.