Most active clergy persons UNDER the age of 65, receive up to $100,000 in group term life insurance from the Church Pension Fund and an additional $20,000 in group term life insurance from their respective church institution. Most active clergy OVER the age of 65, receive an amount of group term life insurance as calculated by the Church Pension Fund.
When the value of employer-provided group term life insurance coverage exceeds $50,000, there is imputed income related to this insurance that needs to be determined and reported. As imputed income, the excess amount of group term life insurance becomes a taxable value to an individual clergy person. The amount of imputed income is calculated by the Church Pension Fund based on a number of factors including age and the number of months the insurance was provided.
After the Office of the Bishop receives this information, a letter is mailed out with the respective amount of imputed income for each employee to the employee AND the church institution where they are employed.
Therefore, church institutions should not file W-2 Forms until after receiving a letter from the Office of the Bishop. In the meantime, each church institution should contact their respective payroll provider to inform them that the church institution is waiting to receive this information before filing W-2 forms.