A bill to clarify the status of certain retirement plans and the organizations which maintain the plans.

        [Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 2589 Engrossed in Senate (ES)]

108th CONGRESS
2d Session
S. 2589

_______________________________________________________________________

AN ACT

To clarify the status of certain retirement plans and the organizations
which maintain the plans.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. CLARIFICATION OF STATUS OF CERTAIN ORGANIZATIONS AND
RETIREMENT PLANS.

(a) In General.--For purposes of any provision of law--
(1) the organization described in subsection (c)(5)
maintaining the retirement plan of the eligible organization
shall be treated as an organization described in section
414(e)(3)(A) of the Internal Revenue Code of 1986 with respect
to its maintenance of benefit plans of the eligible
organization, and
(2) subject to the provisions of subsection (b), any
retirement plan which, as of January 1, 2003, was maintained by
the organization described in paragraph (1) shall be treated as
a church plan (within the meaning of section 414(e) of such
Code) which is maintained by an organization described in
section 414(e)(3)(A) of such Code.
(b) Special Rules Relating to Retirement Plans.--
(1) Tax-deferred retirement plan.--In the case of a
retirement plan which allows contributions to be made under a
salary reduction agreement and which is treated as a church
plan under subsection (a)--
(A) such treatment shall not apply for purposes of
section 415(c)(7) of the Internal Revenue Code of 1986,
and
(B) any account maintained for a participant or
beneficiary of such plan shall be treated as a
retirement income account described in section
403(b)(9) of such Code, except that such account shall
not, for purposes of section 403(b)(12) of such Code,
be treated as a contract purchased by a church for
purposes of section 403(b)(1)(D) of such Code.
(2) Money purchase pension plan.--In the case of a
retirement plan subject to the requirements of section 401(a)
of such Code and treated as a church plan under subsection
(a)--
(A) such plan (but not any reserves held by the
organization described in subsection (c)(5) maintaining
the retirement plan of the eligible organization)--
(i) shall be treated as a defined
contribution plan which is a money purchase
pension plan, and
(ii) shall be treated as having made an
election under section 410(d) of such Code for
plan years beginning after December 31, 2005,
except that notwithstanding the election--
(I) nothing in the Employee
Retirement Income Security Act of 1974
shall prohibit the plan from
commingling for investment purposes its
assets with any other assets of the
organization described in subsection
(c)(5) maintaining the retirement plan
of the eligible organization (or of
plans maintained by it), and
(II) nothing in this section shall
be construed as subjecting such other
assets to any provision of such Act,
(B) notwithstanding section 401(a)(11) or 417 of
such Code or section 205 of such Act, such plan may
offer a lump-sum distribution option to participants
who have not attained age 55 without offering such
participants an annuity option, and
(C) any account maintained for a participant or
beneficiary of such plan shall, for purposes of section
401(a)(9) of such Code, be treated as a retirement
income account described in section 403(b)(9) of such
Code.
(c) Eligible Organization.--For purposes of this section, the term
``eligible organization'' means any organization if, as of January 1,
2003--
(1) more than 1 church recognizes employment at the
organization by a duly ordained, commissioned, or licensed
minister as service in the exercise of the minister's ministry,
(2) at least 1 nationally or internationally recognized
church association includes the organization (or its national
or international representative body) in its directory of
participating or founding organizations,
(3) such organization or national representative body
thereof is part of an ecumenical movement (founded in the
nineteenth century) to promote worldwide fellowship united by
common loyalty to certain religious values,
(4) such organization's national representative body has
chartered at least 1 organization that provides educational,
recreational, social and religious support to the armed forces
of the United States, and
(5) the organization has a retirement plan which is
administered by an organization--
(A) which was established by State law by a special
act of the legislature and subject to certain
provisions of the State's insurance law,
(B) the principal purpose or function of which is
the administration or funding of a plan or program for
the provision of retirement benefits or welfare
benefits, or both, for employees of the eligible
organization,
(C) is treated as an entity exempt from tax under
section 501(m) of the Internal Revenue Code of 1986
without regard to the application of subsection (a),
and
(D) whose organizing documents are amended no later
than January 1, 2006, to require that, for plan years
beginning on or after such date, the greater of 2
trustees or 10 percent of the membership of its board
of trustees be associated with a church.
For purposes of paragraph (5)(D), association with a church may include
past or present service as an officer or board member of a church
(within the meaning of section 3121(w)(3)(A) of such Code) or a church-
controlled organization (within the meaning of section 3121(w)(3)(B) of
such Code).
(d) Effective Date.--The provisions of this section shall apply to
plan years beginning after December 31, 2003.

Passed the Senate July 14, 2004.

Attest:

Secretary.
108th CONGRESS

2d Session

S. 2589

_______________________________________________________________________

AN ACT

To clarify the status of certain retirement plans and the organizations
which maintain the plans.