403b Plan Loses Church Status

[justatester]

S     

        Sorry for the long post.. our client A  acquired Client B in 2013 and applied the transition rule through 2014

·         The transition period expired at the end of 2015

·        Client A sponsors a 401(k) plan which funds a match and service-based profit sharing contribution

·         Client A's 410b ratio and General ratios are below 70% and require ABPT

·         Client B sponsors a 403(b) and MPP

·         At the time of the acquisition, Client A informed us that the acquired group “lost its church status” and subsequently became subject to ERISA.

               Here are some of the questions that I have:

·         What contribution sources from the 403b/formerly-church-MPP would be included in the ABPT? They have 3 sources labeled “mandatory”, “matched”, and “voluntary”. Below are the source descriptions that have been provided.

·         Mandatory – 4% Employee contribution required to receive the 6% Match

·         Matched – 6% Employer Match

·         Voluntary – Employee contribution above 4% for eligible employees. Also includes voluntary EE contributions for those ineligible for match. All       contributions are pretax.

·         Several employees have contributions over $18,000 – does this sound reasonable?

·         If the acquired company has lost its “church status”, does this have any other implications on the Client A plan beyond combined 402g and 415 limits? What exactly does it mean to have lost “church status”? Would both the 403(b) and the MPP be subject to 410(b) testing?

 

[CuseFan]

For ABT you include all benefit sources - so all employer and employee contributions (except catch-ups, which don't count toward anything except their own limit, and how an employee could be over $18k).

An entity that may have been controlled by a church (maybe a hospital, nursing home, school) and so sponsors a church plan (current court cases notwithstanding) is then acquired by another non-church entity - voila, no longer a church plan and subject to the various ERISA requirements for coverage, nondiscrimination, etc.