Bill to Amend Rules for Church Plans Hits Hill

Legislation that would amend the rules for church plans in a variety of ways is now before both chambers of Congress. Rep. Pat Tiberi (R-Ohio) introduced the House version of The Church Plan Clarification Act of 2015, H.R. 4085, and Sen. Ben Cardin (D-Md.) introduced the Senate version, S. 2308. The language in both versions is the same.

The measure would add language to Internal Revenue Code Section 414 regarding:

• the circumstances under which an organization that is otherwise eligible to participate in a church plan shall not be aggregated with another such organization and then, together with another organization, treated as a single employer for a plan year beginning in a taxable year;

• plan transfers and mergers; and

• investments by church plans in collective trusts.

The bill also addresses automatic contribution arrangements. Its language:

• contains a provision that would supersede any state law that prohibits or even restricts the inclusion of an automatic contribution arrangement in any church plan;

• provides that a plan sponsor, plan administrator or employer maintaining an automatic contribution arrangement shall, within a reasonable period before the first day of each plan year, provide to each participant to whom the arrangement applies notice of his or her rights and obligations;

• says that such a notice must be sufficiently accurate and comprehensive to apprise the participant of his or her rights and obligations, and be written so that the average participant can understand it; and

• provides that if a participant has not made an investment election regarding an automatic contribution arrangement, contributions to such an arrangement shall be invested in a default investment.

H.R. 4085 is before the House Ways and Means Committee; S. 2308 is before the Senate Finance Committee.