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Minimum Funding Standards for Church Plans


Guest Patrick Foley
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Guest Patrick Foley

Since Code Section 412 does not apply, the only funding requirement I have found for church plans is in Treas. Reg. 1.401-6©(2), which appears to be a safe harbor but not an absolute requirement. However, it appears that there must be SOME funding for the plan to escape disqualification under Rev. Rul.71-91.

Is there authority on church plan funding that gives more definite guidance than this? Or, absent anything more definite, how do you advise clients on funding of church plans?

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The only requirement to which church plans are subject under federal law would be the funding requirements of pre-ERISA I.R.C. section 401(a)(7). I.R.C. section 412(h). And as you correctly point out, these requirements are not very meaningful as interpreted by Rev. Rul. 71-91.

Of course, church plans are not subject to ERISA preemption of state law. However, in practice, few states seem to regulate them.

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