Over the years, ADMIN Partners has used this blog as a way to educate our community on the services we offer and provide insights into the retirement planning industry. We have also used this platform as a way to examine how retirement planning impacts the various clients that we service. You may have seen us discuss the benefits a 403(b) plan brings to non-profit organizations and even how those working in public education can better plan for their future by investing in their employer-sponsored plan. What you have not heard us talk about, is how 403(b) plans can greatly benefit churches and religious organizations. Not only do these groups get the normal benefits that come with a 403(b) plan, but their organization class also allows them some additional plan options not offered in other plan types.
Here are the 403(b) benefits for church/religious retirement plans.
PLAN TYPE OPTIONS
Much like 501(c)(3) non-profits, churches and religious organizations have the option to utilize a 403(b) plan or a 401(k) plan. While these plan types are very similar, there are also a few differences. To learn more about both plan types, check out our blog post comparing the two here.
Unlike 401(k) plans, 403(b) plans are only subject to ERISA if they meet certain requirements such as offering an employer match or making discretionary decisions on behalf of the plan (you can learn more about this here). Being exempt from ERISA is a large draw to the 403(b) plan type. However, churches and religious groups have even more of an attraction to a 403(b) plan because regardless of the plan provisions, these groups are only subject to the rules of ERISA if they formally elect to be. To do so, the plan sponsor would submit a formal determination letter, electing the plan be subject to ERISA, to the Department of Labor (DOL). Otherwise, the plan can operate exempt from ERISA regardless of the previous set forth by the plan document.
Stay Tuned: Next week we will uncover even more 403(b) benefits for churches and religious organizations!
Please note that church and religious organizations have a complex retirement plan design that requires expertise in not only plan design, but also plan compliance. To learn more about the 403(b) benefits and rules for churches and religious organizations, contact ADMIN’s team of experts at [email protected] or by phone at 877-484-4400.