Church Plan Clarification Act of 2011- Amends Internal Revenue Code pension plan provisions to: (1) apply a special rule for determining the status of an employer participating in a church plan as a member of a controlled group of entities, and (2) allow certain tax-free transfers to and mergers of church plans that are maintained by the same church or association of churches.
Amends the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) to apply limitations on benefits and contributions under qualified employee plans to certain church defined benefit plans.
Includes within the definition of plan under the Employee Retirement Income Security Act of 1974 (ERISA) an employee benefit plan which is a church plan for purposes of ERISA automatic enrollment provisions.
Allows church plans and their supporting organizations to invest plan assets in a group trust (as defined by Internal Revenue Service Revenue Rulings).
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 143 Introduced in Senate (IS)]
112th CONGRESS
1st Session
S. 143
To amend the Internal Revenue Code of 1986 to clarify the treatment of
church pension plans, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 25 (legislative day, January 5), 2011
Mrs. Hutchison (for herself and Mr. Cardin) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to clarify the treatment of
church pension plans, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Church Plan Clarification Act of
2011''.
SEC. 2. APPLICATION OF CONTROLLED GROUP RULES TO CHURCH PLANS.
(a) In General.--Section 414(c) of the Internal Revenue Code of
1986 is amended--
(1) by striking ``For purposes'' and inserting the
following:
``(1) In general.--For purposes'', and
(2) by adding at the end the following new paragraph:
``(2) Church plans.--For purposes of this subsection, in
determining whether an employer who is otherwise eligible to
participate in a church plan is treated as a member of a group
of entities under common control, such employer (including an
organization described in subsection (e)(3)(A)) shall not be
treated as under common control with another entity if, based
on all of the facts and circumstances, the day-to-day financial
and operational activities are not under common control. In
determining if such activities are under common control, the
Secretary shall consider whether the entities have been
historically viewed as distinct entities within the church or
convention or association of churches.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning before, on, or after the date of the
enactment of this Act.
SEC. 3. APPLICATION OF CONTRIBUTION AND FUNDING LIMITATIONS TO 403(B)
GRANDFATHERED DEFINED BENEFIT PLANS.
(a) In General.--Section 251(e)(5) of the Tax Equity and Fiscal
Responsibility Act of 1982 (Public Law 97-248), is amended--
(1) by striking ``403(b)(2)'' and inserting ``403(b)'', and
(2) by inserting before the period at the end the
following: ``, and shall be subject to the applicable
limitations of section 415(b) of such Code as if it were a
defined benefit plan under section 401(a) of such Code and not
the limitations of section 415(c) of such Code (relating to
limitation for defined contribution plans).''.
(b) Effective Date.--The amendments made by this section shall
apply as if included in the enactment of the Tax Equity and Fiscal
Responsibility Act of 1982.
SEC. 4. AUTOMATIC ENROLLMENT BY CHURCH PLANS.
(a) In General.--For purposes of section 514(e) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1114(e)), the term
``plan'' shall include an employee benefit plan which is a church plan
(as defined in section 3(33) of such Act or section 414(e) of the
Internal Revenue Code of 1986).
(b) Effective Date.--This section shall take effect on the date of
the enactment of this Act.
SEC. 5. ALLOW CERTAIN PLAN TRANSFERS AND MERGERS.
(a) In General.--Section 414 of the Internal Revenue Code of 1986
is amended by adding at the end the following new subsection:
``(y) Certain Plan Transfers and Mergers.--
``(1) In general.--Under rules prescribed by the Secretary,
except as provided in paragraph (2), no amount shall be
includible in gross income by reason of--
``(A) a transfer of all or a portion of the account
balance of a participant or beneficiary, whether or not
vested, from a plan described in section 401(a), or a
retirement income account described in section
403(b)(9), which is a church plan described in section
414(e) to a retirement income account described in
section 403(b)(9), if such plan and account are both
maintained by the same church or convention or
association of churches;
``(B) a transfer of all or a portion of the account
balance of a participant or beneficiary, whether or not
vested, from a retirement income account described in
section 403(b)(9) to a plan described in section
401(a), or a retirement income account described in
section 403(b)(9), which is a church plan described in
section 414(e), if such plan and account are both
maintained by the same church or convention or
association of churches, or
``(C) a merger of a plan described in section
401(a), or a retirement income account described in
section 403(b)(9), which is a church plan described in
section 414(e) with a retirement income account
described in section 403(b)(9), if such plan and
account are both maintained by the same church or
convention or association of churches.
``(2) Limitation.--Paragraph (1) shall not apply to a
transfer or merger unless the participant's or beneficiary's
benefit immediately after the transfer or merger is equal to or
greater than the participant's or beneficiary's benefit
immediately before the transfer or merger.
``(3) Qualification.--A plan or account shall not fail to
be considered to be described in sections 401(a) or 403(b)(9)
merely because such plan or account engages in a transfer or
merger described in this subsection.
``(4) Definition of church.--For purposes of this
subsection, the term `church' includes an organization
described in subparagraph (A) or (B)(ii) of subsection
(e)(3).''.
(b) Effective Date.--The amendment made by this section shall apply
to transfers or mergers occurring after the date of the enactment of
this Act.
SEC. 6. INVESTMENTS BY CHURCH PLANS IN COLLECTIVE TRUSTS.
(a) In General.--In the case of--
(1) a church plan (as defined in section 414(e) of the
Internal Revenue Code 1986), including a plan described in
section 401(a) of such Code and a retirement income account
described in section 403(b)(9) of such Code, and
(2) an organization described in section 414(e)(3)(A) of
such Code the principal purpose or function of which is the
administration of such a plan or account,
the assets of such plan, account, or organization (including any assets
otherwise permitted to be commingled for investment purposes with the
assets of such a plan, account, or organization) may be invested in a
group trust otherwise described in Internal Revenue Service Revenue
Ruling 81-100 (as modified by Internal Revenue Service Revenue Ruling
2004-67), or any subsequent revenue ruling that supersedes or modifies
such revenue ruling, without adversely affecting the tax status of the
group trust, such plan, account, or organization, or any other plan or
trust that invests in the group trust.
(b) Effective Date.--This section shall apply to investments made
after the date of the enactment of this Act.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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