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Church plan in-service distribution

Guest Darrell

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Guest Darrell

I represent a large defined benefit church plan that is a non-electing church plan (not subject to ERISA). I am struggling with the application of the prohibition on in-service distributions prior to normal retirement age in the context where a participant terminates employment with a covered church entity and immediately becomes employed by another entity that is affiliated with the same church, but which does not participate in the same plan. Assume for purposes of this question that both entities are either a church or a qualified church-controlled organization. I understand that the controlled group rules of 414©apply for purposes of the prohibition on in-service distributions from a pension plan, but we don't have any real guidance on how to apply the controlled group rules to a church plan (see Proposed Regulation 1.414©-5). Does anyone think I have a problem if we allow a pre-NRA distribution to a former employee who is still working for "the church," but not for a church entity that participates in the same Plan? Thanks.

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