June 2021

Church Plan Sponsors Have Fiduciary Responsibilities: Know Where to Look!

401(k) Advisor

In the May edition of 401(k) Advisor, benefits and executive compensation partners Heather Abrigo and Joshua Waldbeser co-authored an article sharing considerations for services providers and plan sponsors when determining what fiduciary rules apply to church plans.

From an Internal Revenue Service and litigation perspective, the authors defined a church plan under Section 414(e)(1) of the Internal Revenue Code and Section 3(33)(A) of the Employee Retirement Income Security Act of 1974 (ERISA).

Once a church plan meets the definition, the authors described how the plan could elect to be covered by ERISA pursuant to Section 410(d) of the Code. They also explained how a 410(d) election determines whether certain provisions will apply and why this matters. For example, for non-electing church plans, ERISA and certain fiduciary duties do not apply, but there is still a plethora of guidance that plan sponsors should check.

In conclusion, the authors shared best practices for church plan sponsors, such as documenting policies and procedures and following and reviewing them regularly. Overall, they recommended that church plan sponsors understand the applicable body of law that applies and work with their legal counsel and service providers to ensure that those fiduciary duties are being met.

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