I 

114TH CONGRESS 

1ST SESSION H. R. 4085 

To amend the Internal Revenue Code of 1986 to clarify the treatment of 

church pension plans, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 19, 2015 

Mr. TIBERI (for himself, Mr. NEAL, Mr. SESSIONS, Mr. REED, and Ms. 

LINDA T. SA ́NCHEZ of California) introduced the following bill; which was 

referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to clarify 

the treatment of church pension plans, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Church Plan Clarifica5 tion Act of 2015’’. 

6 SEC. 2. CHURCH PLAN CLARIFICATION. 

7 (a) APPLICATION OF CONTROLLED GROUP RULES TO

8 CHURCH PLANS.— 


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1 (1) IN GENERAL.—Section 414(c) of the Inter2 nal Revenue Code of 1986 is amended— 

3 (A) by striking ‘‘For purposes’’ and insert4 ing the following: 

5 ‘‘(1) IN GENERAL.—Except as provided in para6 graph (2), for purposes’’, and 

7 (B) by adding at the end the following new 

8 paragraph: 

9 ‘‘(2) SPECIAL RULES RELATING TO CHURCH

10 PLANS.— 

11 ‘‘(A) GENERAL RULE.—Except as provided 

12 in subparagraphs (B) and (C), for purposes of 

13 this subsection and subsection (m), an organi14 zation that is otherwise eligible to participate in 

15 a church plan shall not be aggregated with an16 other such organization and treated as a single 

17 employer with such other organization for a 

18 plan year beginning in a taxable year unless— 

19 ‘‘(i) one such organization provides 

20 (directly or indirectly) at least 80 percent 

21 of the operating funds for the other orga22 nization during the preceding tax year of 

23 the recipient organization, and 

24 ‘‘(ii) there is a degree of common 

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1 ganizations such that the organization pro2 viding the operating funds is directly in3 volved in the day-to-day operations of the 

4 other organization. 

5 ‘‘(B) NONQUALIFIED CHURCH-CON6 TROLLED ORGANIZATIONS.—Notwithstanding 

7 subparagraph (A), for purposes of this sub8 section and subsection (m), an organization 

9 that is a nonqualified church-controlled organi10 zation shall be aggregated with 1 or more other 

11 nonqualified church-controlled organizations, or 

12 with an organization that is not exempt from 

13 tax under section 501, and treated as a single 

14 employer with such other organization, if at 

15 least 80 percent of the directors or trustees of 

16 such other organization are either representa17 tives of, or directly or indirectly controlled by, 

18 such nonqualified church-controlled organiza19 tion. For purposes of this subparagraph, the 

20 term ‘nonqualified church-controlled organiza21 tion’ means a church-controlled tax-exempt or22 ganization described in section 501(c)(3) that is 

23 not a qualified church-controlled organization 

24 (as defined in section 3121(w)(3)(B)). 


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1 ‘‘(C) PERMISSIVE AGGREGATION AMONG

2 CHURCH-RELATED ORGANIZATIONS.—The 

3 church or convention or association of churches 

4 with which an organization described in sub5 paragraph (A) is associated (within the mean6 ing of subsection (e)(3)(D)), or an organization 

7 designated by such church or convention or as8 sociation of churches, may elect to treat such 

9 organizations as a single employer for a plan 

10 year. Such election, once made, shall apply to 

11 all succeeding plan years unless revoked with 

12 notice provided to the Secretary in such manner 

13 as the Secretary shall prescribe. 

14 ‘‘(D) PERMISSIVE DISAGGREGATION OF

15 CHURCH-RELATED ORGANIZATIONS.—For pur16 poses of subparagraph (A), in the case of a 

17 church plan, an employer may elect to treat 

18 churches (as defined in section 403(b)(12)(B)) 

19 separately from entities that are not churches 

20 (as so defined), without regard to whether such 

21 entities maintain separate church plans. Such 

22 election, once made, shall apply to all suc23 ceeding plan years unless revoked with notice 

24 provided to the Secretary in such manner as the 

25 Secretary shall prescribe.’’. 


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1 (2) CLARIFICATION RELATING TO APPLICATION

2 OF ANTI-ABUSE RULE.—The rule of 26 CFR 

3 1.414(c)–5(f) shall continue to apply to each para4 graph of section 414(c) of the Internal Revenue 

5 Code of 1986, as amended by paragraph (1). 

6 (3) EFFECTIVE DATE.—The amendments made 

7 by paragraph (1) shall apply to years beginning be8 fore, on, or after the date of the enactment of this 

9 Act. 

10 (b) APPLICATION OF CONTRIBUTION AND FUNDING

11 LIMITATIONS TO 403(b) GRANDFATHERED DEFINED

12 BENEFIT PLANS.— 

13 (1) IN GENERAL.—Section 251(e)(5) of the Tax 

14 Equity and Fiscal Responsibility Act of 1982 (Public 

15 Law 97–248), is amended— 

16 (A) by striking ‘‘403(b)(2)’’ and inserting 

17 ‘‘403(b)’’, and 

18 (B) by inserting before the period at the 

19 end the following: ‘‘, and shall be subject to the 

20 applicable limitations of section 415(b) of such 

21 Code as if it were a defined benefit plan under 

22 section 401(a) of such Code (and not to the 

23 limitations of section 415(c) of such Code).’’. 

24 (2) EFFECTIVE DATE.—The amendments made 

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1 fore, on, or after the date of the enactment of this 

2 Act. 

3 (c) AUTOMATIC ENROLLMENT BY CHURCH PLANS.— 

4 (1) IN GENERAL.—This subsection shall super5 sede any law of a State that relates to wage, salary, 

6 or payroll payment, collection, deduction, garnish7 ment, assignment, or withholding which would di8 rectly or indirectly prohibit or restrict the inclusion 

9 in any church plan (as defined in section 414(e) of 

10 the Internal Revenue Code of 1986) of an automatic 

11 contribution arrangement. 

12 (2) DEFINITION OF AUTOMATIC CONTRIBUTION

13 ARRANGEMENT.—For purposes of this subsection, 

14 the term ‘‘automatic contribution arrangement’’ 

15 means an arrangement— 

16 (A) under which a participant may elect to 

17 have the plan sponsor or the employer make 

18 payments as contributions under the plan on 

19 behalf of the participant, or to the participant 

20 directly in cash, 

21 (B) under which a participant is treated as 

22 having elected to have the plan sponsor or the 

23 employer make such contributions in an amount 

24 equal to a uniform percentage of compensation 

25 provided under the plan until the participant 


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1 specifically elects not to have such contributions 

2 made (or specifically elects to have such con3 tributions made at a different percentage), and 

4 (C) under which the notice and election re5 quirements of paragraph (3), and the invest6 ment requirements of paragraph (4), are satis7 fied. 

8 (3) NOTICE REQUIREMENTS.— 

9 (A) IN GENERAL.—The plan sponsor of, or 

10 plan administrator or employer maintaining, an 

11 automatic contribution arrangement shall, with12 in a reasonable period before the first day of 

13 each plan year, provide to each participant to 

14 whom the arrangement applies for such plan 

15 year notice of the participant’s rights and obli16 gations under the arrangement which— 

17 (i) is sufficiently accurate and com18 prehensive to apprise the participant of 

19 such rights and obligations, and 

20 (ii) is written in a manner calculated 

21 to be understood by the average partici22 pant to whom the arrangement applies. 

23 (B) ELECTION REQUIREMENTS.—A notice 

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1 ments of subparagraph (A) with respect to a 

2 participant unless— 

3 (i) the notice includes an explanation 

4 of the participant’s right under the ar5 rangement not to have elective contribu6 tions made on the participant’s behalf (or 

7 to elect to have such contributions made at 

8 a different percentage), 

9 (ii) the participant has a reasonable 

10 period of time, after receipt of the expla11 nation described in clause (i) and before 

12 the first elective contribution is made, to 

13 make such election, and 

14 (iii) the notice explains how contribu15 tions made under the arrangement will be 

16 invested in the absence of any investment 

17 election by the participant. 

18 (4) DEFAULT INVESTMENT.—If no affirmative 

19 investment election has been made with respect to 

20 any automatic contribution arrangement, contribu21 tions to such arrangement shall be invested in a de22 fault investment selected with the care, skill, pru23 dence, and diligence that a prudent person selecting 

24 an investment option would use. 


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1 (5) EFFECTIVE DATE.—This subsection shall 

2 take effect on the date of the enactment of this Act. 

3 (d) ALLOW CERTAIN PLAN TRANSFERS AND MERG4 ERS.— 

5 (1) IN GENERAL.—Section 414 of the Internal 

6 Revenue Code of 1986 is amended by adding at the 

7 end the following new subsection: 

8 ‘‘(z) CERTAIN PLAN TRANSFERS AND MERGERS.— 

9 ‘‘(1) IN GENERAL.—Under rules prescribed by 

10 the Secretary, except as provided in paragraph (2), 

11 no amount shall be includible in gross income by 

12 reason of— 

13 ‘‘(A) a transfer of all or a portion of the 

14 accrued benefit of a participant or beneficiary, 

15 whether or not vested, from a church plan that 

16 is a plan described in section 401(a) or an an17 nuity contract described in section 403(b) to an 

18 annuity contract described in section 403(b), if 

19 such plan and annuity contract are both main20 tained by the same church or convention or as21 sociation of churches, 

22 ‘‘(B) a transfer of all or a portion of the 

23 accrued benefit of a participant or beneficiary 

24 from an annuity contract described in section 

25 403(b) to a church plan that is a plan described 


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1 in section 401(a) or an annuity contract de2 scribed in section 403(b), if such plan and an3 nuity contract are both maintained by the same 

4 church or convention or association of churches, 

5 or 

6 ‘‘(C) a merger of a church plan that is a 

7 plan described in section 401(a), or an annuity 

8 contract described in section 403(b) with an an9 nuity contract described in section 403(b), if 

10 such plan and annuity contract are both main11 tained by the same church or convention or as12 sociation of churches. 

13 ‘‘(2) LIMITATION.—Paragraph (1) shall not 

14 apply to a transfer or merger unless the partici15 pant’s or beneficiary’s total accrued benefit imme16 diately after the transfer or merger is equal to or 

17 greater than the participant’s or beneficiary’s total 

18 accrued benefit immediately before the transfer or 

19 merger, and such total accrued benefit is nonforfeit20 able after the transfer or merger. 

21 ‘‘(3) QUALIFICATION.—A plan or annuity con22 tract shall not fail to be considered to be described 

23 in sections 401(a) or 403(b) merely because such 

24 plan or annuity contract engages in a transfer or 

25 merger described in this subsection. 


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1 ‘‘(4) DEFINITIONS.—For purposes of this sub2 section: 

3 ‘‘(A) CHURCH OR CONVENTION OR ASSO4 CIATION OF CHURCHES.—The term ‘church or 

5 convention or association of churches’ includes 

6 an organization described in subparagraph (A) 

7 or (B)(ii) of subsection (e)(3). 

8 ‘‘(B) ANNUITY CONTRACT.—The term ‘an9 nuity contract’ includes a custodial account de10 scribed in section 403(b)(7) and a retirement 

11 income account described in section 403(b)(9). 

12 ‘‘(C) ACCRUED BENEFIT.—The term ‘ac13 crued benefit’ means— 

14 ‘‘(i) in the case of a defined benefit 

15 plan, the employee’s accrued benefit deter16 mined under the plan, and 

17 ‘‘(ii) in the case of a plan other than 

18 a defined benefit plan, the balance of the 

19 employee’s account under the plan.’’. 

20 (2) EFFECTIVE DATE.—The amendment made 

21 by this subsection shall apply to transfers or merg22 ers occurring after the date of the enactment of this 

23 Act. 

24 (e) INVESTMENTS BY CHURCH PLANS IN COLLEC25 TIVE TRUSTS.— 


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1 (1) IN GENERAL.—In the case of— 

2 (A) a church plan (as defined in section 

3 414(e) of the Internal Revenue Code of 1986), 

4 including a plan described in section 401(a) of 

5 such Code and a retirement income account de6 scribed in section 403(b)(9) of such Code, and 

7 (B) an organization described in section 

8 414(e)(3)(A) of such Code the principal pur9 pose or function of which is the administration 

10 of such a plan or account, 

11 the assets of such plan, account, or organization (in12 cluding any assets otherwise permitted to be com13 mingled for investment purposes with the assets of 

14 such a plan, account, or organization) may be in15 vested in a group trust otherwise described in Inter16 nal Revenue Service Revenue Ruling 81–100 (as 

17 modified by Internal Revenue Service Revenue Rul18 ings 2004–67, 2011–1, and 2014–24), or any subse19 quent revenue ruling that supersedes or modifies 

20 such revenue ruling, without adversely affecting the 

21 tax status of the group trust, such plan, account, or 

22 organization, or any other plan or trust that invests 

23 in the group trust. 


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1 (2) EFFECTIVE DATE.—This subsection shall 

2 apply to investments made after the date of the en3 actment of this Act. 

Æ 


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