403(b)(7) or 403(b)(9) for a church?

[Guest RRS]

I have a client who is a pastor. We opened a 403(B) account for him that his church contributes to on a periodic basis. He does not defer any of his salary. When we make deposits, we code them as employer contributions. My operations department has contacted me several times to explain that if the account will be receiving employer contributions, then I must check the box on the account form that indicates the plan is subject to ERISA. I don't want to check this box because I don't want to obligate the church to ERISA requirements when they should be exempt. Someone told me that I need a 403(B)(9) account for the pastor, not a 403(B)(7). The account agreement that I am using now does refer to 403(B)(7). Are they right? If so, does it matter and why? And, are you aware of a custodian that offers a 403(B)(9) agreement?

[Ellie Lowder]

Churches and qualified church controlled organizations who sponsor employer contribution 403(B) plans are exempt from Title I of ERISA unless they affirmatively elect to be covered.

403(B)(9) Retirement Income Accounts are set up through church pension boards/plan adm. committees and can include investments other than 403(B)(1) annuities or 403(B)(7) custodial accounts.