II 

110TH CONGRESS 

2D SESSION S. 3615 

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

church pension plans, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 26 (legislative day, SEPTEMBER 17), 2008 

Mrs. HUTCHISON (for herself and Mr. CARDIN) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

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 2008’’. 

6 SEC. 2. APPLICATION OF CONTROLLED GROUP RULES TO 

7 CHURCH PLANS. 

8 (a) IN GENERAL.—Section 414(c) of the Internal 

9 Revenue Code of 1986 (relating to employees of partnerVerDate Aug 31 2005 22:46 Sep 28, 2008 Jkt 069200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3615.IS S3615

rwilkins on PROD1PC63 with BILLS
2 

•S 3615 IS

1 ships, proprietorships, etc., which are under common con2 trol) is amended— 

3 (1) by striking ‘‘For purposes’’ and inserting 

4 the following: 

5 ‘‘(1) IN GENERAL.—For purposes’’, and 

6 (2) by adding at the end the following new 

7 paragraph: 

8 ‘‘(2) CHURCH PLANS.—For purposes of this 

9 subsection, in determining whether an employer who 

10 is otherwise eligible to participate in a church plan 

11 is treated as a member of a group of entities under 

12 common control, such employer (including an orga13 nization described in subsection (e)(3)(A)) shall not 

14 be treated as under common control with another 

15 entity if, based on all of the facts and circumstances, 

16 the day-to-day financial and operational activities 

17 are not under common control. In determining if 

18 such activities are under common control, the Sec19 retary shall consider whether the entities have been 

20 historically viewed as distinct entities within the 

21 church or convention or association of churches.’’. 

22 (b) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to taxable years beginning before, 

24 on, or after the date of the enactment of this Act. 


rwilkins on PROD1PC63 with BILLS
3 

•S 3615 IS

1 SEC. 3. APPLICATION OF CONTRIBUTION AND FUNDING 

2 LIMITATIONS TO 403(b) GRANDFATHERED DE3 FINED BENEFIT PLANS. 

4 (a) IN GENERAL.—Section 251(e)(5) of the Tax Eq5 uity and Fiscal Responsibility Act of 1982 (relating to spe6 cial rule for existing defined benefit arrangements), Public 

7 Law 97–248, is amended— 

8 (1) by striking ‘‘403(b)(2)’’ and inserting 

9 ‘‘403(b)’’, and 

10 (2) by inserting before the period at the end the 

11 following: ‘‘, and shall be subject to the applicable 

12 limitations of section 415(b) of such Code as if it 

13 were a defined benefit plan under section 401(a) of 

14 such Code and not the limitations of section 415(c) 

15 of such Code (relating to limitation for defined con16 tribution plans).’’. 

17 (b) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply as if included in the enactment 

19 of the Tax Equity and Fiscal Responsibility Act of 1982. 

20 SEC. 4. ALLOW CERTAIN PLAN TRANSFERS AND MERGERS. 

21 (a) IN GENERAL.—Section 414 of the Internal Rev22 enue Code of 1986 (relating to definitions and special 

23 rules) is amended by adding at the end the following new 

24 subsection: 

25 ‘‘(y) CERTAIN PLAN TRANSFERS AND MERGERS.— 


rwilkins on PROD1PC63 with BILLS
4 

•S 3615 IS

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

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

3 no amount shall be includible in gross income by 

4 reason of— 

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

6 account balance of a participant or beneficiary, 

7 whether or not vested, from a plan described in 

8 section 401(a), or a retirement income account 

9 described in section 403(b)(9), which is a 

10 church plan described in section 414(e) to a re11 tirement income account described in section 

12 403(b)(9), if such plan and account are both 

13 maintained by the same church or convention or 

14 association of churches; 

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

16 account balance of a participant or beneficiary, 

17 whether or not vested, from a retirement in18 come account described in section 403(b)(9) to 

19 a plan described in section 401(a), or a retire20 ment income account described in section 

21 403(b)(9), which is a church plan described in 

22 section 414(e), if such plan and account are 

23 both maintained by the same church or conven24 tion or association of churches, or 


rwilkins on PROD1PC63 with BILLS
5 

•S 3615 IS

1 ‘‘(C) a merger of a plan described in sec2 tion 401(a), or a retirement income account de3 scribed in section 403(b)(9), which is a church 

4 plan described in section 414(e) with a retire5 ment income account described in section 

6 403(b)(9), if such plan and account are both 

7 maintained by the same church or convention or 

8 association of churches. 

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

10 apply to a transfer or merger unless the partici11 pant’s or beneficiary’s benefit immediately after the 

12 transfer or merger is equal to or greater than the 

13 participant’s or beneficiary’s benefit immediately be14 fore the transfer or merger. 

15 ‘‘(3) QUALIFICATION.—A plan or account shall 

16 not fail to be considered to be described in sections 

17 401(a) or 403(b)(9) merely because such plan or ac18 count engages in a transfer or merger described in 

19 this subsection. 

20 ‘‘(4) DEFINITION OF CHURCH.—For purposes 

21 of this subsection, the term ‘church’ includes an or22 ganization described in subparagraph (A) or (B)(ii) 

23 of subsection (e)(3).’’. 


rwilkins on PROD1PC63 with BILLS
6 

•S 3615 IS

1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to transfers or mergers occurring 

3 after the date of the enactment of this Act. 

4 SEC. 5. INVESTMENTS BY CHURCH PLANS IN COLLECTIVE 

5 TRUSTS. 

6 (a) IN GENERAL.—In the case of— 

7 (1) a church plan (as defined in section 414(e) 

8 of the Internal Revenue Code 1986), including a 

9 plan described in section 401(a) of such Code and 

10 a retirement income account described in section 

11 403(b)(9) of such Code, and 

12 (2) an organization described in section 

13 414(e)(3)(A) of such Code the principal purpose or 

14 function of which is the administration of such a 

15 plan or account, 

16 the assets of such plan, account, or organization (includ17 ing any assets otherwise permitted to be commingled for 

18 investment purposes with the assets of such a plan, ac19 count, or organization) may be invested in a group trust 

20 otherwise described in Internal Revenue Service Revenue 

21 Ruling 81–100 ( as modified by Internal Revenue Service 

22 Revenue Ruling 2004–67), or any subsequent revenue rul23 ing that supersedes or modifies such revenue ruling, with24 out adversely affecting the tax status of the group trust, 


rwilkins on PROD1PC63 with BILLS
7 

•S 3615 IS

1 such plan, account, or organization, or any other plan or 

2 trust that invests in the group trust. 

3 (b) EFFECTIVE DATE.—This section shall apply to 

4 investments made after the date of the enactment of this 

5 Act. 

Æ 


rwilkins on PROD1PC63 with BILLS