Subscribe Now!
Free Daily News, Jobs, Webcasts, Discussions
Post and Distribute
Your Jobs
ARPA News
ARPA Webcasts

Featured Jobs

DB Retirement Plan Administrator

The Nolan Company
(Telecommute / Overland Park KS)

The Nolan Company logo

Director of 401(k) Implementation, Core

Human Interest
(Telecommute / Mill Valley CA)

Human Interest logo

Plan Document Specialist

Jocelyn Pension Consulting
(Telecommute / Boulder CO / San Rafael CA)

Jocelyn Pension Consulting logo

Product Support Consultant

ftwilliam.com part of Wolters Kluwer Legal & Regulatory
(Telecommute)

ftwilliam.com part of Wolters Kluwer Legal & Regulatory logo

Retirement Plan Administrator (Account Manager)

Kushner & Company
(Telecommute / Portage MI)

Kushner & Company logo

Retirement Plan Administrator

My Benefits, LLC
(Telecommute / Daphne AL / Atlantic Beach FL)

My Benefits, LLC logo

Retirement Plan Administrator

RSW & Associates
(CT / NJ / NY)

RSW & Associates logo

401(k) Consultant

TPS Group
(Telecommute / North Haven CT)

TPS Group logo

Retirement Plan Administrator

Bates & Company
(Telecommute / Winter Park FL)

Bates & Company logo

DB/DC Administrator

Primark Benefits
(Telecommute / Burlingame CA)

Primark Benefits logo

Employee Benefits/Health and Welfare Attorney

Miller Johnson
(Telecommute / Grand Rapids MI / Kalamazoo MI / Detroit MI)

Miller Johnson logo

Director of Finance

NYCDC of Carpenters Benefit Funds
(New York NY)

DC or DB Administrator

Farmer & Betts, Inc.
(Telecommute / Tacoma WA / Tualatin OR / Littleton CO)

Farmer & Betts, Inc. logo

Retirement Plan Consultant / Relationship Manager

Associated Pension Consultants
(Chico CA / Sacramento CA)

Associated Pension Consultants logo

401(k) Implementation Manager

Human Interest
(Telecommute / San Francisco CA)

Human Interest logo

DC Retirement Plan Administrator

The Nolan Company
(Telecommute / Overland Park KS)

The Nolan Company logo

Free Newsletters

“BenefitsLink continues to be the most valuable resource we have at the firm.”

-- An attorney subscriber

Mobile App image LinkedIn icon
Twitter icon
Facebook icon

BenefitsLink > Q&A Columns >

Who's the Employer?

Answers are provided by S. Derrin Watson, JD, APM

Summary of Supreme Court Decision on Church Plans

(Posted June 13, 2017)

Question 344: What is the significance of the recent Supreme Court decision on church plans?

Answer:

Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017) clarifies that certain plans can qualify as church plans, even though they were not established by a church itself. The decision allows these plans to retain their exemption from ERISA. In the process of interpreting the ERISA question, the ruling clarifies tax qualification and 403(b) issues for church plans. However, an important question was not before the high court, and this leaves open a litigation route.

When ERISA section 3(33) was passed, a "church plan" had to be "established and maintained" by a church. In 1980, Congress amended the law to provide that a plan could be a church plan if it was maintained by what the court called a "principal purpose organization." This is an organization whose principal purpose is administering or funding benefit plans for church employees. The organization must be controlled by or associated with the church. A pension board that a church establishes would be a good example of a principal purpose organization.

The case involved several large tax-exempt organizations that operate hospitals. The organizations each are associated with a church. The hospitals sponsor defined benefit plans that are underfunded by the standards that apply to ERISA plans. The hospitals claimed the plans are exempt from ERISA because they are church plans. Employees filed suit claiming ERISA applied. Three courts of appeal agreed with the employees. The Supreme Court did not.

The employees argued that, after the 1980 amendment, a church plan could be maintained by a church or by a principal purpose organization, but a church had to establish the plan. The hospitals argued that if a plan is maintained by a principal purpose organization, it does not matter who set up the plan. Applying frequently used standards of interpreting statutes, the Supreme Court unanimously agreed with the hospitals.

Although I do address ERISA issues, most of my practice focuses on tax issues facing qualified and 403(b) plans. The case is significant on the tax side because the same definition of church plan appears in Code section 414(e). Thus, the hospitals should be able to claim exemption from the coverage requirements of Code section 410(b), for example. See Chapter 23 of Who's the Employer for a further discussion of church plans.

Interestingly, the case is not the end of the story. The opinion notes that the decision did not address the question of whether the hospital plans were maintained by a principal purpose organization. But that’s a fight for another day.

This has been a quick summary of the effect of the decision. In my next column, we will look more closely at the requirements for church plans and how the decision addresses the statutory requirements.


Important notice:

Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.

The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.


Copyright 1999-2017 S. Derrin Watson
Related links:

(restricted access)

(restricted access)

© 2021 BenefitsLink.com, Inc.