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Update on IRS Church Plan Rulings: IRS Church Plan Ruling Activity Resumed in 2011, But With New Notice Requirement - Emil Estafanous, CPA : Emil Estafanous, CPA

Update on IRS Church Plan Rulings: IRS Church Plan Ruling Activity Resumed in 2011, But With New Notice Requirement

In Revenue Procedure 2011-44, a IRS announced that it was resuming estimate of requests for rulings that certain retirement skeleton consecrate “church plans” as tangible underneath §414(e).  The IRS had dangling statute activity in this area several years ago in sequence to examination a ubiquitous church devise rules. 


The Revenue Procedure establishes a new requirement for church devise statute requests – a notice contingency be given to all devise participants and other meddlesome persons describing a impact on their devise should it be deemed a church plan.  The indication notice provided, for example, contains a following language: “This notice informs we that a church devise underneath § 414(e) of a Code is generally not compulsory to approve with many manners that ask to other retirement plans. Thus, those protections and rights underneath sovereign law are not compulsory to be supposing to participants and other meddlesome persons.”[1] 


Whether requiring this notice will have a “chilling effect” on applications for church devise rulings stays to be seen.  Anecdotal information from several AICPA members indicates that while a notice does tend to trigger inquiries from employees concerning since their employer has filed for a church devise ruling, employees do not seem to be submitting apart comments to a IRS as available underneath a notice.


An allege IRS statute is not compulsory in sequence for a retirement devise to validate for church devise status, though such rulings might be requested where acknowledgment of a plan’s standing is desirable.  While retirement skeleton sponsored directly by a church might clearly validate as church plans, skeleton sponsored by an classification dependent with a church (e.g., schools and hospitals) contingency accommodate additional control tests to validate as church plans.  In such cases advisors mostly suggest a statute ask in sequence to conduct correspondence risk.


Church skeleton are free from many of a mandate imposed on competent retirement skeleton underneath Title we of ERISA and § 401(a), such as coverage, nondiscrimination, smallest vesting and annual stating requirements.  In addition, tangible advantage church skeleton are not theme to PBGC coverage or a smallest appropriation rules.  Church skeleton so have fewer restrictions on their pattern and operation, and have reduce “overhead” since they do not need annual stating (including credentials of audited financial statements) and are not theme to PBGC coverage premiums.


[1] Rev. Proc. 2011-44, Appendix

About Emil Estafanous, CPA
Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

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