kmhaab Posted April 10, 2020 Posted April 10, 2020 Does anyone know if the IRS will issue a PLR on the church plan status of a proposed retirement plan? Sponsor would like to adopt a plan but wants to know what they are getting into. I know Rev. Proc. 2020-1 states will not issue a PLR on a "hypothetical situation or alternatives of a proposed transaction," but it's not 100% clear to me the proposed adoption of a plan falls into those categories. Thoughts?
Patricia Neal Jensen Posted April 15, 2020 Posted April 15, 2020 I am a little confused by this question. There are pre-approved 403(b) plans which can be sponsored by churches. Why doesn't your client just adopt one? The sticky issue sometimes is whether or not the proposed plan sponsor is actually a church (or comparable religious organization). If it is clear that the proposed plan sponsor is a church, just help them adopt a pre-approved 403(b) for a Non-Electing Church (assuming they want to not be ERISA) and they will have an IRS Letter which accompanies the Plan. Let me know if I missed the point of your question! PNJ QBI/ Ascensus Patricia Neal Jensen, JD Vice President and Nonprofit Practice Leader |Future Plan, an Ascensus Company 21031 Ventura Blvd., 12th Floor Woodland Hills, CA 91364 E patricia.jensen@futureplan.com P 949-325-6727
Dave Baker Posted April 16, 2020 Posted April 16, 2020 Hmm. I'm not aware of anything in Rev. Proc. 2011-44 or Rev. Proc. 2011-4 that says a plan cannot be merely in proposed form, and PLRs typically are sought for proposed transactions rather than a done deal ... and yet the point of Rev. Proc. 2011-44 was to add a requirement that "interested persons" be notified of the ruling request, such as plan participants, of which there would be none in a proposed plan situation... Hmm. Certainly the IRS continues to issue church plan rulings, such as this one from January -- https://www.irs.gov/pub/irs-wd/202001008.pdf Does anybody happen to follow these church plan PLRs regularly, who has seen one that addresses a plan that is proposed rather than already-adopted? Maybe you could make a phone call to Laura Warshawsky, who is the author of the above-cited recent PLR. Luke Bailey 1
kmhaab Posted August 26, 2020 Author Posted August 26, 2020 I am circling back around to this question. Patricia - The plan sponsor would like to join an existing multiple employer 403(b) plan for churches, but they are a church-related organization and not an actual church. There is a very strong argument that they are "associated with or controlled by" a church, but the plan administrator will not allow them to join without a Private Letter Ruling. The IRS instructions and checklist for requesting a church plan ruling do not really fit this situation, as we're not requesting a ruling on the actual plan. I think we would be requesting a ruling on the eligibility of the employer to sponsor a church plan (i.e. are they "associated with or controlled by" a church?), but I am unclear if the IRS will rule on this narrow issue. Any idea?
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