108TH CONGRESS

2D SESSION S. 2589

AN ACT

To clarify the status of certain retirement plans and the

organizations which maintain the plans.

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

2

S 2589 ES

1 SECTION 1. CLARIFICATION OF STATUS OF CERTAIN ORGA2 NIZATIONS AND RETIREMENT PLANS.

3 (a) IN GENERAL.—For purposes of any provision of

4 law—

5 (1) the organization described in subsection

6 (c)(5) maintaining the retirement plan of the eligible

7 organization shall be treated as an organization de8 scribed in section 414(e)(3)(A) of the Internal Rev9 enue Code of 1986 with respect to its maintenance

10 of benefit plans of the eligible organization, and

11 (2) subject to the provisions of subsection (b),

12 any retirement plan which, as of January 1, 2003,

13 was maintained by the organization described in

14 paragraph (1) shall be treated as a church plan

15 (within the meaning of section 414(e) of such Code)

16 which is maintained by an organization described in

17 section 414(e)(3)(A) of such Code.

18 (b) SPECIAL RULES RELATING TO RETIREMENT

19 PLANS.—

20 (1) TAX-DEFERRED RETIREMENT PLAN.—In

21 the case of a retirement plan which allows contribu22 tions to be made under a salary reduction agreement

23 and which is treated as a church plan under sub24 section (a)—
†

3

S 2589 ES

1 (A) such treatment shall not apply for pur2 poses of section 415(c)(7) of the Internal Rev3 enue Code of 1986, and

4 (B) any account maintained for a partici5 pant or beneficiary of such plan shall be treated

6 as a retirement income account described in

7 section 403(b)(9) of such Code, except that

8 such account shall not, for purposes of section

9 403(b)(12) of such Code, be treated as a con10 tract purchased by a church for purposes of

11 section 403(b)(1)(D) of such Code.

12 (2) MONEY PURCHASE PENSION PLAN.—In the

13 case of a retirement plan subject to the requirements

14 of section 401(a) of such Code and treated as a

15 church plan under subsection (a)—

16 (A) such plan (but not any reserves held

17 by the organization described in subsection

18 (c)(5) maintaining the retirement plan of the el19 igible organization)—

20 (i) shall be treated as a defined con21 tribution plan which is a money purchase

22 pension plan, and

23 (ii) shall be treated as having made

24 an election under section 410(d) of such

25 Code for plan years beginning after De-
†

4

S 2589 ES

1 cember 31, 2005, except that notwith2 standing the election—

3 (I) nothing in the Employee Re4 tirement Income Security Act of 1974

5 shall prohibit the plan from commin6 gling for investment purposes its as7 sets with any other assets of the orga8 nization described in subsection (c)(5)

9 maintaining the retirement plan of the

10 eligible organization (or of plans

11 maintained by it), and

12 (II) nothing in this section shall

13 be construed as subjecting such other

14 assets to any provision of such Act,

15 (B) notwithstanding section 401(a)(11) or

16 417 of such Code or section 205 of such Act,

17 such plan may offer a lump-sum distribution

18 option to participants who have not attained

19 age 55 without offering such participants an

20 annuity option, and

21 (C) any account maintained for a partici22 pant or beneficiary of such plan shall, for pur23 poses of section 401(a)(9) of such Code, be

24 treated as a retirement income account de25 scribed in section 403(b)(9) of such Code.
†

5

S 2589 ES

1 (c) ELIGIBLE ORGANIZATION.—For purposes of this

2 section, the term ‘‘eligible organization’’ means any orga3 nization if, as of January 1, 2003—

4 (1) more than 1 church recognizes employment

5 at the organization by a duly ordained, commis6 sioned, or licensed minister as service in the exercise

7 of the minister’s ministry,

8 (2) at least 1 nationally or internationally rec9 ognized church association includes the organization

10 (or its national or international representative body)

11 in its directory of participating or founding organi12 zations,

13 (3) such organization or national representative

14 body thereof is part of an ecumenical movement

15 (founded in the nineteenth century) to promote

16 worldwide fellowship united by common loyalty to

17 certain religious values,

18 (4) such organization’s national representative

19 body has chartered at least 1 organization that pro20 vides educational, recreational, social and religious

21 support to the armed forces of the United States,

22 and

23 (5) the organization has a retirement plan

24 which is administered by an organization—
†

6

S 2589 ES

1 (A) which was established by State law by

2 a special act of the legislature and subject to

3 certain provisions of the State’s insurance law,

4 (B) the principal purpose or function of

5 which is the administration or funding of a plan

6 or program for the provision of retirement ben7 efits or welfare benefits, or both, for employees

8 of the eligible organization,

9 (C) is treated as an entity exempt from tax

10 under section 501(m) of the Internal Revenue

11 Code of 1986 without regard to the application

12 of subsection (a), and

13 (D) whose organizing documents are

14 amended no later than January 1, 2006, to re15 quire that, for plan years beginning on or after

16 such date, the greater of 2 trustees or 10 per17 cent of the membership of its board of trustees

18 be associated with a church.

19 For purposes of paragraph (5)(D), association with a

20 church may include past or present service as an officer

21 or board member of a church (within the meaning of sec22 tion 3121(w)(3)(A) of such Code) or a church-controlled

23 organization (within the meaning of section

24 3121(w)(3)(B) of such Code).
†

7

S 2589 ES

1 (d) EFFECTIVE DATE.—The provisions of this sec2 tion shall apply to plan years beginning after December

3 31, 2003.

Passed the Senate July 14, 2004.

Attest:

Secretary.
108TH CONGRESS

2D SESSION S. 2589

AN ACT

and the organizations which maintain the plans.

To clarify the status of certain retirement plans