Review of Regulations (Non-QCCOs) (July 31, 2017)


The Church Alliance welcomes the opportunity to respond to the request of the Department of the Treasury ("Treasury") for recommendations on Treasury Regulations that can be eliminated, modified, or streamlined in order to reduce burdens. As described in greater detail below, we believe that there is an urgent need to modify certain regulations under Section 403(b) of the Internal Revenue Code of 1986, as amended (the “Code”), which are creating substantial burdens for clergy, church lay workers, and ministries that participate in 403(b)(9) plans.

Last year, members of the church benefits community were informed by the Internal Revenue Service ("IRS”) that only churches and church-associated organizations described in section 3121(w)(3)(B) of the Code ("QCCOs"), can participate in 403(b)(9) plans. Under this interpretation of the Code and Treasury Regulations – an abrupt departure from over thirty years of prior understanding and precedent – church-associated organizations that are not described in Code section 3121(w)(3)(B) - commonly referred to as “non-QCCOS” – cannot participate in 403(b)(9) plans.