Is Your Retirement Plan a "Church Plan"?


Retirement plans for ministries of the church enjoy special advantages within the present federal tax code. These advantages can free-up budget dollars for the ministry, make the plan's design a better "fit" for the ministry, streamline administration and retain more dollars for employees' retirement. A "church plan" has much more flexibility in how it is designed and operated than other types of plans because a church plan is exempt from many of the federal laws and regulations with which most private sector plans must comply.

Church plans are not just plans for traditional churches. The retirement plans of service ministries associated with a religious denomination like the UCC--such as hospitals and communities that provide services to the aging, children, youth and family, and persons with developmental disabilities--may also be church plans. In fact, under the law, the retirement plan of a service ministry associated with the United Church of Christ is a church plan unless the plan has consciously made a written election under the Code to be subject to the federal laws from which it would otherwise be exempt.

It can be very advantageous for your retirement plan to be a church plan. A church defined benefit retirement plan is not subject to the Pension Benefit Guaranty Corporation ("PBGC") requirements and is not required to pay PBGC premiums. In addition, a church plan is not subject to many of the complex federal laws that govern most private sector retirement plans. For example, a church plan is not subject to federal law requirements such as those relating to joint and survivor annuities, mergers and transfers of assets and liabilities, assignment or alienation of benefits, commencement of benefits, reductions in benefits due to Social Security increases, and forfeiture of mandatory contributions.

Even more importantly, church plans are not subject to the reporting, disclosure, participation, vesting and funding requirements imposed on most private sector retirement plans by the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In other words, a church plan is not required to file Form 5500s with the government or to provide summary plan descriptions ("SPDs"), summaries of material modifications ("SMMs"), or summary annual reports ("SARs") to retirement plan participants. Some church plans are also exempt from the nondiscrimination testing requirements for retirement plans found in the Internal Revenue Code ("Code").

The Pension Boards – United Church of Christ offers church plan services to ministries associated with the United Church of Christ including hospitals and communities for providing services to the aging; children, youth and families; and persons with developmental disabilities. To access the Pension Boards' church plan services, contact Don Barnes, Vice President, at (212) 729-2720, or Jim Herod, General Counsel, at (972) 437-3012, for more information.

Jim Herod, Pension Boards—UCC