Information Sharing Agreements--Church Plan

[Guest aciepluch]

Has anyone thought about how the information sharing agreement requirements would apply for a church plan that is exempt from the plan document requirement under final 403(b) regulations? More specifically, if there is no plan document and the employer does not limit vendor options, how is the requirement that the vendors among whom a participant can exchage be set forth in the plan?

[TLGeer]

Has anyone thought about how the information sharing agreement requirements would apply for a church plan that is exempt from the plan document requirement under final 403(b) regulations? More specifically, if there is no plan document and the employer does not limit vendor options, how is the requirement that the vendors among whom a participant can exchage be set forth in the plan?

Where is the exemption you mentioned?

[J Simmons]

aciepluch,

Prior to the new regs, there was no express requirement for an overarching plan document for a 403b plan that was sponsored by an employer not subject to ERISA, such as a church. However, the new 403b regs impose such a requirement for the tax advantage. So the exemption from ERISA that a church plan has will (as of 1/1/09) no longer exempt a church 403b plan from needing a plan document.

However, if you know of some provision in the new 403b regs that exempts churches from the plan document requirement, like Tom, I would like to know where in the new regs that exemption is.

[TLGeer]

aciepluch,

Prior to the new regs, there was no express requirement for an overarching plan document for a 403b plan that was sponsored by an employer not subject to ERISA, such as a church. However, the new 403b regs impose such a requirement for the tax advantage. So the exemption from ERISA that a church plan has will (as of 1/1/09) no longer exempt a church 403b plan from needing a plan document.

However, if you know of some provision in the new 403b regs that exempts churches from the plan document requirement, like Tom, I would like to know where in the new regs that exemption is.

I would argue that the writing requirement has always been in 403(b)(5), specifically because a 403(b) has always had to meet the basic statutory requirements and 403(b) has always require aggregation of contracts. This was implicit rather than explicit and never enforced. But it has always been true that, for example, the possibility of multiple hardships or the lack of any enforcer of annual limitations could be used to blow up a 403(b). Which I guess is neither here nor there, given the non-enforcement.

As to finding a 403(b) document suited for a church plan, good luck. Church plans have their own rules, with two basic differences in the common remitter environment, the fact that by using a retirement income account the plan can avoid offering only mutual funds and annuities and, oh, the fact that the pesky universal availability rule doesn't apply. Document providers are not drafting to that niche, so the ordinary documents provided by the usual providers may not fit very well. I have a form of common remitter document that does work, but I'm hardly a usual provider.

[Guest aciepluch]

aciepluch,

Prior to the new regs, there was no express requirement for an overarching plan document for a 403b plan that was sponsored by an employer not subject to ERISA, such as a church. However, the new 403b regs impose such a requirement for the tax advantage. So the exemption from ERISA that a church plan has will (as of 1/1/09) no longer exempt a church 403b plan from needing a plan document.

However, if you know of some provision in the new 403b regs that exempts churches from the plan document requirement, like Tom, I would like to know where in the new regs that exemption is.

I would argue that the writing requirement has always been in 403(b)(5), specifically because a 403(b) has always had to meet the basic statutory requirements and 403(b) has always require aggregation of contracts. This was implicit rather than explicit and never enforced. But it has always been true that, for example, the possibility of multiple hardships or the lack of any enforcer of annual limitations could be used to blow up a 403(b). Which I guess is neither here nor there, given the non-enforcement.

As to finding a 403(b) document suited for a church plan, good luck. Church plans have their own rules, with two basic differences in the common remitter environment, the fact that by using a retirement income account the plan can avoid offering only mutual funds and annuities and, oh, the fact that the pesky universal availability rule doesn't apply. Document providers are not drafting to that niche, so the ordinary documents provided by the usual providers may not fit very well. I have a form of common remitter document that does work, but I'm hardly a usual provider.

Final Reg. Section 1.403(b)-5(b) explicitly states that the universal availability and plan document requirements do not apply to a 403(b) contract purchased by a church (as defined in Section 1.403(b)-2). 1.403(b)-2 incorporates the Section 3121(w)(3)(A) defintion of church. Thus, this exemption applies to what I call the "bricks and mortar" church, but not the church-affiliated hospital.

[John Feldt ERPA CPC QPA]

Look at §1.403(b)-3(b)(3)(iii). Churches are exempt from the written plan requirement under the Final Regulations as long as they do not have retirement income accounts.