GNJ Clergy Compensation Guide

GNJ Clergy Compensation Report Instructions
 Read Instructions Before Completing This Report

NOTE: This guide is for contextual guidance on the line items within the Clergy Compensation Report. If you need a guide for the technical aspect of filling out the Excel form (Example: How to use dropdown boxes, how to save in Excel, etc.), please follow this link.

Purpose and Process

The Clergy Compensation and Expense Report is used to set the pastoral compensation for those under appointment by the Bishop to a church. This report ensures that pastors are receiving a salary consistent with GNJ’s equitable salary guidelines, as well as appropriate benefits based on conference relationship and appointment status. This form should be completed for each pastor under appointment. This report is completed by the SPRC and then brought to the Church Council for approval and signature prior to submission and action by the Charge Conference. The recommendation becomes final after action by the Charge Conference and the signature of the District Superintendent. While the Compensation Report may provide guidance when preparing tax documents, it is important for the church to work with their payroll company and tax professionals to ensure accuracy of tax reporting.

Complete This Report in Excel Only

This report exists in Excel in order to make completing the form easier for the local churches. In order for certain amounts to automatically calculate correctly, please only complete this report in Excel. Handwritten forms cannot be accepted.   

Housing Exclusion Resolution Attached 

In order to make completing the Housing Exclusion Resolution easier (required from all clergy), this form has now been added as a third page to the Clergy Compensation Report. Page 3 will automatically be completed for you upon entering amounts on line 3 and/or 7 of this report. The only item on page 3 that must be manually entered is the pastor’s home address.

Form W-2 Reporting

For the appropriate W-2 reporting boxes, please refer to the individual lines on the Clergy Compensation Report.  As noted, while the Compensation Report may provide guidance when preparing tax documents, it is important for the church to work with their payroll company and tax professionals to ensure accuracy of tax reporting.

Date Effective

The effective date for changes in compensation is January of the new year, except in the case where there is a change either in the pastor’s status or the pastoral appointment at some other date.

Multi-Point Charge

For a multi-point charge, each church should be assigned one of the columns (Church A, B, C, D, or E) and this should be used consistently throughout the report. Clergy with multiple appointments MUST enter all appointment salary information into a single Compensation Report form. Meaning there must be a single Compensation Report form per Clergy person.

Conference Relationships 

Minimum Salary 

The Minimum Equitable Salary Guide can be found on the GNJ website and on the second tab of the excel compensation report. This guide represents the minimum amount of a pastor’s cash salary linked to status and years of full-time service. Part time equivalencies are to be included. Pastors receiving their first full-time appointment would move to level one on January 1^st after having been appointed for a complete appointment year. For example, a pastor receiving his/her first full time appointment on July 1, 2025, would move to level one on January 1, 2026. Please check with your pastor to determine their number of full-time years under appointment.  

Line Item Report Instructions

This cash salary is recommended and approved by the SPRC and Church Council and is funded by local church resources. This line must include any grants awarded to support compensation, such as equitable, supplemental, regional, or similar grants.  It is extremely important to ensure these grants are included as plan compensation for pension calculation purposes. Accordingly, separate lines for grants within the line items included in prior versions of this report have been removed to avoid confusion. Your District Superintendent will advise on any grants awarded.

Enter any amount designated for non-vouchered expenses (i.e., the church gives the pastor an allowance and does not ask for an accounting of how it was spent or does not require IRS documentation). Note: this is taxable income.

This is the cash amount paid directly to a pastor to care for their own housing when a parsonage is not provided. The pastor is responsible for paying SECA (Self-Employment Contributions Act) tax on this amount.  The housing allowance increases the total compensation budgeted by the church for the pastor.

If you are receiving a Housing Allowance, it is recommended that this amount or another designated amount be excluded from the pastor’s taxable income as a Housing Exclusion (Line 7 of this report). Pastors should consult a qualified tax professional to determine how to properly calculate and report this exclusion. Additional details on Housing Allowance can be found here.

In addition to including this amount in the Clergy Compensation Report, the IRS requires a Housing Exclusion Resolution to be completed. A housing allowance should be reported in Box B of this form. When the amount is entered on line 3 of the Clergy Compensation Report, it will automatically populate this information into the Housing Exclusion Resolution on page 3.

This line will automatically calculate the total cash salary and housing allowance (if applicable), lines 1-3. This amount represents the total amount of cash salary paid to the pastor from all sources.  

TAX SHELTERED SALARY ITEMS (Lines 5-8)                                                                                                                       

Use this section to list the tax-sheltered portion of the salary reported on Line 4. Any of these tax-sheltered designations   do not increase the church’s financial responsibility but is a deduction from the pastor’s cash compensation. These items  should not be reported in Form W-2 Box 1 as taxable income. Refer to the individual lines on the Clergy Compensation Report for the appropriate reporting boxes.                                                                                                                                        

Effective January 1, 2026, UMPIP clergy personal contributions will be replaced with the new pension program, Compass.  Compass is a retirement plan administered by Wespath Benefits and Investments. Like UMPIP, a pastor may choose to have an amount withheld from his/her salary and sent to Wespath for investment in their Compass account on a tax-deferred basis (or they may choose after-tax contribution; see line X). Pastors will receive a $1 for $1 match from the local church on up to 4% of the clergy’s compensation.  It is important to note, all pastors will be defaulted at a 4% tax-deferred with the option to increase/lower the contribution, if preferred.  It is highly encouraged for pastors to contribute 4% to maximize their retirement benefit by receiving the full possible match.  

Unlike UMPIP, all Compass personal elections made by the pastor will no longer be processed by Wespath Benefits and Investments.   Effective January 1, 2026, all pastor elections will be collected and billed to the local church via the Monthly Billing Statement by the Annual Conference.  Pastors must complete a Contribution Election Form if this is a new appointment or a new election. This form should be sent to the Conference and filed at the local church. This form and more information on Compass are available here.  

This line is for retirement savings withheld from salary and paid to a plan other than Compass, such as a 403(b).

A Housing Exclusion is an amount excluded from the pastor’s taxable income for any amount spent on maintaining or furnishing the pastor’s home. This is a dollar amount designated by the clergy person and approved by the local church to provide a tax shelter for housing-related expenses (pastor pays SECA tax).

A housing exclusion is meant to defray costs incurred by clergy which directly relate to providing a home for self and family including, as applicable, any and all of the following: rent, mortgage payments and interest, furnishings, insurance, real estate taxes, utilities, maintenance and upkeep, and any other expenses directly associated with the provision of housing. Allowable expenses do not include personal items such as food, clothing, entertainment, and domestic help. Any amount designated that is not spent must be added into the taxable amount by the pastor at the time of filing his/her taxes. A housing exclusion may not be done retroactively. Pastors should consult their accountant to determine how to calculate exclusions. See more information on a Housing Exclusion here.

The IRS requires that all clergy complete a Housing Exclusion Resolution (even if the amount is zero). Entering the amount of the desired Housing Exclusion in line 7 of the Clergy Compensation Report will automatically enter this information into the Housing Exclusion Resolution on page 3.

This line will automatically calculate the total of lines 5-8.    

TAXABLE SALARY ITEMS (Lines 9-13)                                                                                                                    

Line 9 is used to report taxable items deducted from the salary as listed on Line 1.                                               

Effective January 1, 2026, UMPIP clergy personal contributions will be replaced with the new pension program, Compass.  Compass is a retirement plan administered by Wespath Benefits and Investments. Like UMPIP, a pastor may choose to have an amount withheld from his/her salary and sent to Wespath for investment in their Compass account on an after tax basis. See line 4 for more information on Compass.

Unlike UMPIP, all Compass personal elections made by the pastor will no longer be processed directly by Wespath.  Effective January 1, 2026, all pastor elections will be collected and billed to the local church via the Monthly Billing Statement by the Annual Conference.  Pastors must complete a Contribution Election Form if this is a new appointment or a new election. This form should be sent directly to Conference and also filed at the local church. This form and more information on Compass are available here.

These are expenses paid directly by the local church on behalf of the pastor, including reimbursements to the pastor for social security payments, auto expenses including auto insurance and lease payments, club memberships, children’s scholarships, health insurance premiums for non-Conference health plans, etc. The details of these expenses must be outlined in a written agreement and submitted with the Clergy Compensation Report.   

This line will automatically calculate.

This line will automatically calculate.

This line will automatically calculate and must equal line 4.

PARSONAGE

If the church provides a parsonage to the pastor, enter an X in column in line 14. Doing this will automatically populate and calculate line 15 based on the salary amount in line 13.

If an X is placed in line 14, this line will automatically calculate the amount for which the parsonage is valued.  In the Compass pension plan, this equates to the greater of $10,000 or 35% of cash salary.  Note: this is automatically spread to all churches, regardless of which church provides the parsonage based on proportional salary amounts. This is based on Compass rules and will automatically populate within the Benefits Access enrollment system.

BENEFITS (NON-TAXABLE)

Lines A, B, C, D, and E

Please enter an X on the appropriate line if you are in any of the categories listed in lines A-E. Doing this will automatically calculate the benefits that specific conference relationships and appointment statuses are eligible to receive. An X is not required for all conference relationships, and this should match the conference relationship and appointment status listed at the beginning of this report. If you are uncertain about the pastor’s status, please ask your pastor. Appointment status and conference relationship information is provided on the clergy appointment memo for all new appointments.

• If you enter X in Box A or C, you are not eligible for CPP or UMLife Options.
• If you enter X in Box B, you are not eligible for Compass, CPP, or UMLife Options.
• If you enter X in Box D (only eligible category is ½ time ordained clergy), you are eligible to receive UMLife Options (Box 26).  
• If you enter X in Box E, you are not eligible for CPP or UMLife Options.
• Additionally, if you would like to waive Compass and UMPIP enter and X in the Waiver line. This is not available for Full Time Pastors. A Compass Waiver form upload is still required.

Disclaimer: if this section is completed incorrectly, the church will be billed the correct amount for pension and health insurance even if there is an error on this form.

WAIVING COMPASS: If you are not full time and you'd like to waive Compass, please fill out the Compass Waiver form and upload it to Arena under Church Conference Uploads. A blank copy of the waiver form is attached at the bottom of this instruction article.

Only pastors serving under full time appointment are eligible to receive the Conference health insurance plan. If a pastor is serving full time, enter $27,100 as the 2026 health insurance premium. If not full-time, please leave this line blank. If serving full time as part of a clergy couple, please enter the entire 2026 premium, ($27,100) for each church as every church with a full-time pastor is responsible for the annual blended rate.   For a multi-charge appointment with one pastor, churches may split the cost as the appointment equals one full-time appointment.  

NOTE: This line will always appear regardless of Benefit Category selection. It is treated as Salary Compensation and will not be used if you do not qualify or wave for Compass.

This line is automatically calculated. The amount on this line is the definition of compensation for pension purposes and is used to determine the Compass, CPP, UMPIP, and UMLife Options benefits (lines 18-22) received by eligible pastors.

Note: Retired clergy and lay persons serving as Supply Pastor (SY) or Certified Lay Minister (LM) do not receive contributions for conference sponsored Compass, CPP, UMPIP, or UMLife Options. For those pastors, lines 18-22 should be zero dollars. If, however, your church has adopted the UMPIP plan for lay employees, please enter the annual contribution amount for the Supply Pastor on line 21.

The Compass required local church contribution is based on 5.47% of Clergy Compensation (Compensation includes salary and parsonage value or housing allowance, whichever applies). This line will automatically calculate. The amount on this line represents the annual required church contributions in the Compass plan that will be billed from the Conference to the local church.

• Pastors serving full time, ¾ time, or ½ time are eligible for Compass.
• Pastors serving less than full time can waive out of Compass. If waiving out, leave this line blank.
• The amount in this line item does not directly correspond to the amount that is credited to the pastor’s pension account with Wespath Benefits and Investments. Administration and uncollectable fees are included within this line item.
• More information on Compass is available Compass | Wespath Benefits & Investments here.

Under the new Compass pension plan, local churches are required to contribute a $1 for $1 match on up to 4% of the clergy’s compensation.  In addition to payroll contributions, Compass includes a “student loan” provision. Many clergy carry student loan debt, which can make it difficult to pay back the loan and contribute to their retirement account. To address this, through Compass, the UMC provides matching contributions up to 4% of compensation based on qualified educational loan payments made by clergy. In other words, the plan matches student loan payments as if they were participant contributions into Compass.

For purposes of the Compensation Report and Annual Conference billing, it is assumed the pastor will contribute the full 4% of compensation between payroll contributions and/or student loans.  If, at year-end, it’s determined the pastor did not contribute the full 4%, the local church will be reimbursed the difference between the amount billed and the actual contributions in the first quarter of the following year.  Since the student loan provision allows the clergy to submit the loan payments at the end of the year, this prevents a large retro-active billing when the conference sees this contribution.  This will be further explained during Compass training sessions.

CPP provides death benefits, long-term disability income replacement, and certain other survivor benefits for eligible clergy of The United Methodist Church and their families. This line will automatically calculate. The 2026 rate is 3.3% of Plan The amount on this line represents the annual premium that will be billed from the Conference to the local church.

• Pastors serving full time or ¾ time are eligible.
• Part-Time Local Pastors and Student Local Pastors are not eligible.
• Administration and uncollectable fees are included within this line item.
• More information on CPP available here.

This line represents the church’s contribution to UMPIP. This benefit is available to pastors serving ¼ time that are not eligible to receive Compass (line 18). This line will automatically calculate. The amount on this line represents the annual premium that will be billed from the Conference to the local church.

• If waiving out of this benefit, leave this line blank. For a waiver form, please contact Alexa Taylor at ataylor@epagnj.org.
• The amount in this line item does not directly correspond to the amount that is credited to the pastor’s pension account with Wespath Benefits and Investments. Administration and uncollectable fees are included within this line item.
• More information on UMPIP available here.

UMLife Options is long-term disability and life insurance coverage offered to eligible United Methodist clergy and lay employees. This line will automatically calculate.

• Appointed ½ time clergy serving as a Full Member, Provisional Member, Deacon in Full Connection, or Associate Member are eligible.
• Part-Time Local Pastors or Student Local Pastors are not eligible.
• Administration and uncollectable fees are included within this line item.
• More information on UMLife Options available here.

Indicate on this line any other non-taxable benefits you are paying for your pastor. The details of these benefits should be outlined in a written description and submitted with the Clergy Compensation Report. Non-conference health insurance premiums are taxable and should be entered on line 10.   

This line will automatically calculate the total of lines 16-23 (excluding line 17). This amount will be the total cost of all benefits paid by the local church.

REIMBURSED BUSINESS EXPENSES (NON-TAXABLE)

An accountable reimbursement plan is not a salary reduction item (tax-shelter). A reimbursement assumes that the employer (church) is paying for the employee’s (pastor) business expenses out of its own funds. When an employer pays an employee for his/her business expenses through a salary reduction, it is the employee and not the employer that is paying for the expenses. Reimbursements paid through a salary reduction agreement would be taxable to the employee. In order for a reimbursement plan to be accountable, the employee must submit proper documentation of the expense in a timely manner (no more than 60 days after the expense). Note: All full-time clergy must receive a minimum of $2,500 in reimbursable expenses.

Show amount budgeted for reimbursed travel. Pastor must submit documentation of date, place, business purpose, and mileage.

Show amount budgeted for continuing education events. Pastor must submit documentation of date, place, and event.

List amount budgeted for other business-related expenses (e.g. business related meals, resources, etc.). Pastor must submit receipts.

       This line will automatically calculate the total of lines 25-27.

TOTAL SALARY AND BENEFITS PACKAGE 

OPTIONAL: GRANTS BREAK-OUT SECTION 

While Grants are to be included in the Church Salary in line 1, some churches may wish to record separated grant amounts and see visually the salary impact without grants on a church budget. This section allows for amounts per grant type, and will display a total salary amount from line 29 with the grant amounts subtracted. This section is not used in any calculations for the previous line items, and is for visual reporting purposes only.

ELECTRONIC SIGNATURES

This report does not require handwritten signatures. Instead, it can be signed with electronic signatures or typed in after receiving approval from all required leadership positions that sign this report. Make every effort to acquire all electronic signatures before sending this report to the regional office. Clicking the "I Agree" box indicates that the salary package has been approved by the appropriate body. Final approval is contingent upon a vote by the charge conference and the signature of the District Superintendent.   

IMPORTANT ITEMS TO NOTE: 

• Health Insurance – churches will be billed directly for their pastor's health insurance premium responsibility. This is separate from the church's blended rate premium. Churches should deduct this amount from the pastor's salary. This does not change the church's blended rate.
• Dental & Vision Plans – HealthFlex offers three dental plans via the Cigna Dental Network and three Vision Plan via VSP.   Churches will be billed directly for their pastor's dental and/or vision plan enrollment. These plan costs are not the church's responsibility. Churches should deduct this amount from the pastor's salary.

A Flexible Spending Account (FSA) is a tax-advantaged savings account offered through the HealthFlex Plan that allows participants to set aside pre-tax dollars to pay for eligible out-of-pocket expenses. These expenses typically include medical care (e.g., co-pays, prescriptions, medical supplies, dental and vision expenses, and Dependent Care (via a Dependent Care FSA, for child or elder care).   The 2025 Contribution limit is $3,300.   2026 Contributions limit will be available in the Fall 2025.  Contributions to an FSA for full-time clergy can be done through HealthFlex Exchange. The church's payroll company may also allow for FSA contributions for those not enrolled in the HealthFlex Plan. Contributions are not the church's responsibility. Churches should deduct this amount from the pastor's salary.