Church plan with employer contributions

[Guest Margaret25]

I undertsand that that a church plan is not required to cover all employees. However, if the plan allows all employees to participate in deferrals but restricts employer contributions to a select group of individuals, could there be a coverage problem if the restricted group only covers 25% of the eligible participants (including the 1 HCE)? (In this case all of the eligible employees would fall under a typical non-excludable category under an ERISA plan.)

If this isn't a coverage problem does anyone have a citation I could refer to?

Thanks

[Guest mjb]

Under IRC 403(b)(1) a church which meets the statutory definition under IRC 3121(w) is exempt from having to provide nondiscriminatory contributions for employees.