Is my 501C3 a qualified organization for the 402g 3k catch-up?

[Guest bakcrab]

I am hoping my agency qualifies as a "health and welfare" organization which is listed as one of the qualifying entities in 402g but I haven't been able to find this term defined anywhere.

Any help with this would be much appreciated.

[mbozek]

402(g) was added by the Tax Reform Act of 1986--- There is no definition or legislative history as to the entities that qualfiy as a health and welfare service agency /organization.

[Everett Moreland]

I've looked and looked and found no guidance.

[Guest Yanikoski]

I don't think that there is a clear answer to this one. In our 403(B) software we say: "The Financial Accounting Standards Board defines them as including 'those not-for-profit organizations that derive their revenue primarily from the general public to be used for general or specific purposes connected with health, welfare, or community services.' It is not certain, however, that the Internal Revenue Service will abide by this rather inclusive definition, even though they have not provided one of their own." To be honest, I'm not sure even this is up-to-date, though I have not heard of anything more recent.

My understanding of the general practice, however, is that most 501©(3) organizations (other than those that clearly fit into one of the other categories) are NOT eligible for the catchup. The tax code seems to be trying to restrict this to educational, religious, and health care organizations. Personally, I would say that if your organization is primarily involved in providing some kind of health services, you are probably OK. If you you are not, then you are probably not OK (after all, the category is "health AND welfare", not health OR welfare). It's a guess either way, though.

[mbozek]

Some benefit commentators have suggested that health and welfare service organization was intended for entities such as the Red Cross who combine health services (e.g., blood drives) with welfare (disaster relief).