Salary Reduction Agreement

Where applicable, this agreement is a supplement to an existing employment contract

This Salary Reduction Agreement is executed by the following parties:

Name of Local Church (Employer): ____________________________________________________

Name of Employee: ________________________________________________________________

Social Security Number of Employee: __________________________________________________

The following are true:

1. The employee wants to receive the benefits of Section 403(b) of the Internal Revenue Code of 1954 by participating in an annuity purchase program available through the employer.

2. The employer wants the employee to receive those benefits.

Therefore, it is agreed that:

1. As of ______________________ (a date subsequent to the signing of this agreement), the annual salary payable to the employee will be reduced by

$__________________ beginning _____________ (date). This agreement supercedes any previous agreements between the employee and employer.

2. The employer will use the amount of the salary reduction to buy a nonforfeitable annuity contract for the employee from the following insurance company: ________________________________________________.

3. The employee and employer understand and agree that–

this annuity will be purchased at the employee’s request under a program adopted by the employer.
the employee accepts the provisions of that program.
the employer doesn’t guarantee the annuity, nor require its purchase.

4. This agreement is legally binding and irrevocable with respect to the amounts earned while it is in effect.

5. The employee cannot make a salary reduction agreement, such as this one, more than once during any taxable year. The exception is cases where an underlying employment contract will expire within one year of the signing of this agreement.

6. Nothing in this agreement affects the employer’s right to discharge the employee, with or without cause.

7. Both employer and employee may end this agreement after giving 30 days’ written notice to the other party.

________________________________________________________________
EMPLOYEE’S SIGNATURE and TITLE

________________________
DATE

________________________________________________________________
NAME OF EMPLOYER (CHURCH NAME)

________________________
DATE

File one copy in the church files, and let the employee keep a copy.

A copy of this form can be downloaded in PDF format from the IRS website.