403(b) Multiple Employer Plan

[Guest LLandau]

Is it possible for several churches to establish a multiple-employer 403(b) plan? The salary structures differ from church to church with some of the pastors paid by their churches and receiving regular salaries, other of the pastors seem to be almost self-employed. To further complicate matters, the size of the churches vary greatly, from only a pastor, to churches with large staffs. If such a multiple-employer type 403(b) plan is permissible, would it be established by one church and then adopted by the others?

[Guest tthurston]

A group of churches may establish a multi-employer plan if they are connected to each other such as an association of churches, convention, etc. Of course, if they aren't already related in some fashion, they could create an association relationship and that would probably be acceptable.

Several things to consider are: 1). The employment status of the pastors - pastors have dual tax status. They are almost always considered to be employees for income tax purposes and they are always considered self-employed for social security purposes. 2). The costs of establishing the plan. This would be a fairly expensive proposition for a small association of churches with limited assets and flow. 3). Administration of the plan. Finding a provider with experience with church plans may be difficult.

Good Luck,

Tim Thurston,

Church Benefit Resources

t_thurston@hotmail.com

[Guest LVanSteeter]

I know that Fidelity does several large church associations (as described) 403(b) plans. Depending on the bells and whistles, the cost would probably vary.

Good Luck

[Guest getaxa]

I think that you making this very complicated. First of all, are there any employer contributions to this plan? If not, set up the 403(b) with salary deductions and fund it with an annuity or a 403(b)7. You do not need a plan document for churches or church controlled organizations. If there are employer contributions, set up an adminstrive policy to handle the details of the employer contributions...you still don't need a plan doc. Done. Doesn't cost the employer anything.

[Ellie Lowder]

Agree! As long as the churches have not elected ERISA coverage (and most do not), even employer contributions to a 403(b) plan are simple and not costly to administer.