The Church Plan Clarification Act of 2015, which passed by a voice vote on the Senate floor on December 10, was made into law when President Obama signed the tax extender bill a week later.
Sponsored by Senators. Ben Cardin, D-Maryland, and Rob Portman, R-Ohio, the Church Plan Clarification Act clarifies the application of certain tax and retirement laws and regulations to the unique structures of church pension plans.
Not only are most church retirement plans exempt from the Employee Retirement Income Security Act of 1974 (ERISA), instead they have to satisfy special laws and regulations reflecting the unique issues surrounding such plans and the churches that offer them.
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Church retirement plans must conform to specific state and federal laws and Church Alliance regulations, including state fiduciary standards, state contract law, and Internal Revenue Code requirements.
However, because their structure is different from ERISA-compliant plans, church plans may now be operating in an uncertain compliance atmosphere in the wake of some legislative and regulatory changes. The Church Plan Clarification Act provides clarification on how five different legal/regulatory issues apply to those plans.
The Act covers the application to church retirement plans of controlled group rules; grandfathered defined benefit plans; automatic enrollment; transfers between 403(b) and 401(a) plans; and 81-100 trusts.
The Act was attached to the tax extender bill, which means that it will not now have to be passed in the House of Representatives.
"Retirement security should not be based on faith when you dedicate your working life to serving a church, synagogue or other religious entity," Cardin said in a statement.
Cardin continued, "Many so-called 'church plans' date back to the 18th century. While their unique structures have been recognized by the law, our modern, complicated tax system hasn't always been accommodating. More than 1 million clergy, faith institution workers, and their dependents are closer now to having the well-deserved peace of mind that comes with the financial security during retirement that we wish for every American."
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