Let us now praise church-maintained pension and tax-sheltered annuity plans

Article Abstract:

Pension plans maintained by churches are favorably treated because in deference to constitutional concerns that church and state not become enmeshed, such plans are not subject to some of the more burdensome requirements other employers must follow. The sponsor of the plan must meet the church definition of IRC 414(e) and ERISA 3(33) to be exempt from most Code and ERISA tax and nontax requirements. In general, only the relatively lenient pre-ERISA tax ruled must be followed.

Employee benefits, Churches, Church buildings

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Proper financial accounting for deferred compensation arrangements

Article Abstract:

The elective or non-elective structure of nonqualified deferred compensation arrangements (DCAs) partially determines the applicable generally accepted accounting principles. DCAs are unfunded or informally funded to achieve ERISA exempt status which results in possibly too great a financial statement impact for some employers. Employers should carefully balance the disadvantages of DCAs with the need to reward top executives with tax-deferred benefits.

Tax accounting, Accounting and auditing, Deferred compensation

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National Office provides important new guidance in the church plan area

Article Abstract:

Private Letter Ruling 9733016, issued on Aug 15, 1997, provides guidance on church pension plans under Internal Revenue Code section 414(e). Employees of tax-exempt organizations that are associated with a church are also eligible for participation in a church plan. The letter ruling concerned a merger of a religious hospital with a tax-exempt nonreligious hospital. In this case, the merged pension plan was regarded as a church plan.

Taxation, Nonprofit organizations, Church officers

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