Welfare Plan 410(d) Election

[Guest Patrick Foley]

Is there clear authority that a 414(e) church plan which is a welfare plan cannot elect ERISA coverage under Code section 410(d)? All I've found is rumor and innuendo....

Thanks!!

[Guest earthy]

Yes, they may elect under 410(d) of the Internal Revenue Code to be "employee benefits plans" within the context of Title I of ERISA. Title I of ERISA applies to both retirement benefits and welfare benefits.

See Treas. Reg. 1.410(d)-1©(2).

NOTE: There are some exclusions to those plans that may considered to be "church plans" in the first place.

earthy in Houston

[Guest Patrick Foley]

Thanks earthy. The 410(d) reg seems to imply that a welfare plan CAN elect, but I'm skeptical. A BenefitsBoard post early this year stated that "according to the IRS and the DOL a church welfare plan cannot elect to be covered by ERISA," and I remember an ABA Employee Benefits Committee question to the DOL several years ago to which the DOL replied in the same way. But I haven't found any cases or rulings addressing the question specifically.

[Larry Hansen]

To my knowledge, there is no clear authority either way as to whether a 414(e) church welfare plan can elect ERISA coverage pursuant to Code section 410(d); however, based upon personal experience, I believe the DOL’s view is that only church retirement plans can elect to be covered under ERISA.

Several years ago, we filed an advisory opinion request with the DOL to confirm that a church welfare plan could elect to be covered under ERISA. Because Code section 410(d) falls under the jurisdiction of the IRS, the DOL wouldn’t rule without the IRS’s blessing. So, we filed a private letter ruling request with the IRS. Ultimately, the IRS refused to rule favorably on the basis that section 410 is a vesting provision that affects only retirement plans.

[Guest Patrick Foley]

Thanks, Larry--that is very helpful.

[smm]

I have also been looking for some authority that specificaly allows a welfare plan to make a 410(d) election, but have not found located anything specific. The BNA portfolio (page A-15) on church plans states that such an election is no longer as critical as it once was, because of the impact of the Church Plan Parity and Entanglement Prevention Act. Supposedly, this Act "amends ERISA" (I have not located the specific amendment) to deem a church plan to be a single employer plan and allow for limited pre-emption. Has anyone looked at this?

Thanks.

[Larry Hansen]

Here's a link to the text of the Act (P.L. 106-244):

http://frwebgate.access.gpo.gov/cgi-bin/ge...publ244.106.pdf

Here's a link to the relevant section of the USC as added by the Act, 29 USC 1144a:

http://caselaw.lp.findlaw.com/scripts/ts_s...le=29&sec=1144a

[smm]

Thanks for the cite. I did read the act prior to posting a reply. I generally ignore USC cites and go straight to the ERISA act as amended. Much to my surprise, CCH and BNA do not have the amended sections in the appropriate place (as ERISA Section 514a). In any event, back to the guts of my response, if I am reading the Act correctly, it merely prevents a state from treating a church welfare plan as an "unlicensed" insurance company and imposing the solvency/reserve requirements on the plan. All other rights of participants would still apply. Therefore, to the extent it is available, a church plan may still want to (assuming it is available) make the 410(d) election to come under all of Title I.