Retirement

When ERISA was enacted in 1974, church plans were exempted from it unless they affirmatively elected to be subject to it. However, the original definition of “church plan” in both ERISA and the Internal Revenue Code (Code) bore little resemblance to a church plan in operation. The first part of the original church plan definition was satisfactory. Under it, a church plan was a plan established and maintained for its employees by a church or by an association or convention of churches which is exempt from tax under Code section 501. However, the original church plan definition went on to say, in effect, that only the employees of church agencies for which the plan was maintained on January 1, 1974 could participate in the plan—no new church agencies could be admitted to plan participation. In addition, the original definition provided that, after December 31, 1982, the plan would not be a church plan if it covered the employees of any church agency. This meant that, after 1982, no employee of a church-related nursing home, inner-city agency, children’s home, college or hospital could receive pension or welfare benefits from a church plan. Thus, under ERISA as originally passed, a church pension board had to make one of two difficult choices by the end of 1982: either cease to cover the employees of church agencies or divide the church plan into two plans—one non-ERISA plan covering denominational and local church employees, and the other, an ERISA-covered plan for the employees of church agencies.

As noted above, the Church Alliance was formed to advocate for changes to the church plan definitions in ERISA and the Code. As a result of the Church Alliance’s efforts, Congress revised the definition of “church plan” when it passed the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA). Under the revised MPPAA definition, a church plan could continue to provide retirement and welfare benefits to the employees of all church agencies.

The Church Alliance has posted comment letters, memoranda and other related materials on the Comment Letters page.