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June 9, 2014

What is a Church Plan?

In recent months, the definition of church plan has been under high scrutiny.  A number of courts have looked at the issue, as well as government agencies.  Without going into any details on any specific situations, it is very important that an entity claiming church plan status work very closely with its legal counsel. 

As background, a church plan is exempt from ERISA unless it elects to be subject to ERISA.  According to ERISA Section 3(33), a church plan is defined as a plan established and maintained by a church; or, a plan established by a church and maintained by a tax exempt organization, the purpose of which is the administration and funding of the plan that is controlled by or in association with the church.  The controversy seems to rest with whether the plan absolutely must be established by the church for itself or its related organization, or whether it can be established by the church-related organizations.  The courts thus far have gone both ways on this issue. 

Again, any entity concerned about church plan status should monitor these developments closely.

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