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403b Plan Loses Church Status

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        Sorry for the long post.. our client A  acquired Client B in 2013 and applied the transition rule through 2014

·         The transition period expired at the end of 2015

·        Client A sponsors a 401(k) plan which funds a match and service-based profit sharing contribution

·         Client A's 410b ratio and General ratios are below 70% and require ABPT

·         Client B sponsors a 403(b) and MPP

·         At the time of the acquisition, Client A informed us that the acquired group “lost its church status” and subsequently became subject to ERISA.

               Here are some of the questions that I have:

·         What contribution sources from the 403b/formerly-church-MPP would be included in the ABPT? They have 3 sources labeled “mandatory”, “matched”, and “voluntary”. Below are the source descriptions that have been provided.

·         Mandatory – 4% Employee contribution required to receive the 6% Match

·         Matched – 6% Employer Match

·         Voluntary – Employee contribution above 4% for eligible employees. Also includes voluntary EE contributions for those ineligible for match. All       contributions are pretax.

·         Several employees have contributions over $18,000 – does this sound reasonable?

·         If the acquired company has lost its “church status”, does this have any other implications on the Client A plan beyond combined 402g and 415 limits? What exactly does it mean to have lost “church status”? Would both the 403(b) and the MPP be subject to 410(b) testing?


Edited by justatester

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For ABT you include all benefit sources - so all employer and employee contributions (except catch-ups, which don't count toward anything except their own limit, and how an employee could be over $18k).

An entity that may have been controlled by a church (maybe a hospital, nursing home, school) and so sponsors a church plan (current court cases notwithstanding) is then acquired by another non-church entity - voila, no longer a church plan and subject to the various ERISA requirements for coverage, nondiscrimination, etc.

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