A bill to permit a church plan to continue after 1982 to provide benefits for employees of organizations controlled by or associated with the church and to make certain clarifying amendments to the definition of church plans.

Amends the Internal Revenue Code to make permanent the special tax treatment of church agency pension plans as qualified church plans. Provides that plans maintained by groups or associations of churches include individuals "substantially all" of whom are qualified beneficiaries.

Allows such plans to retain accrued benefits, according to their terms, or to continue receiving contributions for up to five years for separated employees. Allows any plan which is determined to have failed to meet church plan requirements a grace period of 270 days, or any other period specified by the Secretary of the Treasury or a court in an adjudication of such an issue, to bring itself into compliance without becoming disqualified. Applies these provisions retroactively to 1974.