PLANSPONSOR - October 2017 - 43
in Advocate Health Care Network et al. v.
Stapleton et al. The ruling means that
plans maintained by certain tax-exempt
organizations that are controlled by or
associated with a church, such as a faithbased
hospital or university, may qualify
as a church plan exempt from ERISA.
Specifically, as long as the plan is
maintained by an organization whose
" principal purpose " is the administration
or funding of a retirement plan or welfare
plan, or both, and that organization is
controlled by or associated with a church,
the plan is a church plan.
But litigation over church plans
will likely continue in the lower courts
because the Supreme Court left several
issues unresolved, including:
* What qualifies as a " principal
purpose organization " that may maintain
a church plan?
* What does it mean to be " controlled
by " or " associated with " a church?
* What is the definition of a " church " ?
* Is the church plan exemption from
ERISA an unconstitutional accommodation
under the First Amendment's establishment
clause?
Of course, Congress could in the
meantime amend ERISA Section 3(33),
which defines a church plan, to tighten
the definition, but that seems unlikely in
the near future given its current political
makeup.
If you have any question as to
whether your organization may establish
or maintain a church plan, you should
consult an attorney.
Offering Non-eligible
Investments Has
Consequences
Q: What is the consequence to a plan
that, though it was written to permit only
403(b) eligible investments, (403(b)(1)
fixed/variable annuities, and/or 403(b)(7)
custodial accounts (mutual funds), actually
offers nonqualified investments? Is
this a defect that can be self-corrected?
A: We assume you are not referring to a
403(b)(9) retirement income account in
a church plan, as investments outside of
what would normally be permitted in a
403(b) plan are permitted in such accounts,
and thus an operational failure would not
exist for the fact pattern you provide.
For all other plans/accounts, a failure
does indeed exist. And the consequences
of such a failure, though it is an operational
error and not a defect as to form in
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PLANSPONSOR - October 2017
Table of Contents for the Digital Edition of PLANSPONSOR - October 2017
Moving Money
403(b) / 457 Buyer's Guide
Best Practices for the IPS
The Middle Ground
Questions, Answered
Navigating RMDs
PLANSPONSOR - October 2017 - Cover1
PLANSPONSOR - October 2017 - Cover2
PLANSPONSOR - October 2017 - 1
PLANSPONSOR - October 2017 - 2
PLANSPONSOR - October 2017 - 3
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PLANSPONSOR - October 2017 - Moving Money
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PLANSPONSOR - October 2017 - Best Practices for the IPS
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PLANSPONSOR - October 2017 - The Middle Ground
PLANSPONSOR - October 2017 - 41
PLANSPONSOR - October 2017 - Questions, Answered
PLANSPONSOR - October 2017 - 43
PLANSPONSOR - October 2017 - Navigating RMDs
PLANSPONSOR - October 2017 - 45
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PLANSPONSOR - October 2017 - 48
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PLANSPONSOR - October 2017 - Cover4
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