Lay Pastor Compensation
This page contains a link to the online worksheet where you will enter information about your lay pastor's compensation. The district office will use this information to create a Compensation Agreement Form which will be returned to you to present for approval at a charge conference.
Before you go to the worksheet, review the information below about the elements of compensation for lay pastors and the information you need to gather prior to completing the worksheet.
Pastoral compensation for lay persons is limited to cash salary and an accountable reimbursement fund (including mileage reimbursement).
- Lay pastors have no required minimum cash salary, but the District Superintendent will have a recommendation. This should be discussed with the DS prior to completion of the compensation information worksheet.
- The church must have an accountable reimbursement policy in place prior to setting up an accountable reimbursement fund. Here is a link to a basic, sample policy on which you can base yours: Accountable Reimbursement Policy. You can use the Accountable Reimbursement Worksheet to help figure an amount for the accountable reimbursement fund.
- Mileage reimbursement can be as high as the IRS maximum business rate or less. You can find that rate at https://www.irs.gov/tax-professionals/standard-mileage-rates. If you are completing a compensation worksheet prior to release of the applicable year's rate, you can just put "IRS business rate" in the mileage field. The IRS will publish the rate prior to the church having to pay it out.
Lay compensation is subject to payroll taxes and the church is responsible to pay the employer portion of the payroll taxes. Lay pastors should always receive a W-2, never a 1099. The Conference provides a Payroll Tax Guide for Lay Supply Pastors and other lay employees, and an annual "Tax Letter" for local churches as part of the online Local Church Treasurer Manual.**
Lay pastors do not qualify for any Conference-sponsored benefits. However, local churches have the option to sponsor a lay pension plan for these people. It is possible to sign up such that the pastor can contribute to the pension plan out of their salary with or without any contribution from the church. If the pastor is your only employee, this is relatively simple. But if you offer any type of benefit to your lay pastor, you must offer the same benefit to all employees of the church who work the same number of hours. The local church sponsoring benefits or providing extra money for benefits can be complex. Be sure to do the research ahead of time related to your particular situation. Meg Kau, Conference HR/Benefits Specialist, can answer questions about this. You can reach her at email@example.com or (503) 802-9224.
Before you begin the worksheet, gather the following information:
- What will be the annual cash salary?
- What will be the annual accountable reimbursement amount?
- What will be the mileage reimbursement rate?
- Will the church offer any benefits?
Once you have gathered this information, you are ready to begin the Lay Pastor Compensation Information Worksheet. For support with the compensation information worksheet, contact your District Office as listed below.
After you have completed the worksheet, inform your district office that it is finished. They will take the information you have given and create a Compensation Agreement Form and return it to you to be presented at your charge conference for approval.
Cascadia District Office, firstname.lastname@example.org (503) 581-3969
Columbia District Office, email@example.com (503) 802-9227
Crater Lake District Office, firstname.lastname@example.org (541) 689-3725
Sage District Office, email@example.com (503) 802-9225
** If your church does not currently have a payroll company or someone in your church who is competent to do payroll, you have the option to sign up with Paychex, a payroll company who has an agreement with The United Methodist Church to offer services at a discounted rate. Paychex has staff dedicated to serving United Methodist Churches specifically. You can contact Jeff Kohl, jkohl@Paychex.com, 561-687-1770, ex. 5256482 directly.