Can a Christian Day care do 403b

[Guest NoName]

My question may not have a complete clear cut answer. Can a Christian Day Care service set up a 403(B). It does both education and religion. I have a feeling it depends on how it files for taxes(as in 501c3 an so on). At what point does the govt distinguish between just plain day care and an actual educational center. Is it the amount of kids, employees, size of building or does it just boil down to tax filing.

[Michael Devault]

403(B) plans may be set up for the benefit of:

1. Employees of an employer described in section 501©(3),

2. employees who work for educational organizations if the employer is a state or a political subdivision or agency of a state, or,

3. ministers.

For purposes of (2), above, an educational organization is one that maintains a regular facult and curriculum and has a regularly enrolled body of students in attendance. From a practical matter, this generally applies to public school teachers.

With respect to your situation, if the day care center has received a determination from the IRS that it's a 501©(3) organization, you are eligible to establish a 403(B) program for your employees. So, you're correct: it just boils down to the tax status of your organization: The number of kids, employees, etc. has no bearing on the matter.

Hope this helps.

[Guest Yanikoski]

Churches and church-related organizations are also eligible for 403(B) plans. If the day-care operation is owned and operated by a church, then it should qualify.