Church plan/non-erisa/ok to have 2 plans?

[Guest Peggy806]

A 403b plan is exempt from ERISA because it is a church plan. The plan document excludes a few classes of employees. The company wants to write a separate 403b plan to cover one of the excluded classes, but the provisions will be different from Plan #1.

Do you see any issues with them doing this?

[ETA Consulting LLC]

No issues. Churches are exempted from 1) Written Plan requirements, 2) universal availability; and 3) non-discrimination rules.

Good Luck!

[Guest Peggy806]

No issues. Churches are exempted from 1) Written Plan requirements, 2) universal availability; and 3) non-discrimination rules.

Good Luck!

Thanks for the reply. Does that also mean they can state in their document that "Part Time" employees are excluded, even though most plans cannot say that? They have some part time employees who work well over 1000 hours per year, but they have been excluding them from participation. They allow full time employees, both hourly and exempt, to be participants. Their document has always stated that hourly employees were excluded, but that has not been the reality of the plan operation.

Another question. Based on what I have said above, could they operate under one plan and have different contribution rates for the different classes? It seems to me that they do need to write up separate plan documents, but this plan is getting very confusing for me. They want to have auto enrollment for one class of employees only.

Thanks

[ETA Consulting LLC]

Correct. None of the service class exclusion rules apply to churches. The heiarchy goes 1) Churches; 2) Governments; 3) Everyone else. All of the IRS rules apply to 3, while 'virtually' none apply to churches. Some, but not all, apply to Governments.

For instance, Public Schools (governmental employers) must have written plans for their 403(b) plans. This rule does not apply to churches.

Good Luck.