II 

108TH CONGRESS 

2D SESSION S. 2589

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

maintain the plans. 

IN THE SENATE OF THE UNITED STATES 

JUNE 24, 2004

Mr. BUNNING (for himself, Mr. GRAHAM of Florida, Mr. SMITH, Mr. HATCH, 

Mr. CHAMBLISS, Mr. MILLER, Mr. DODD, and Mr. CONRAD) introduced 

the following bill; which was read twice and referred to the Committee 

on Finance 

A BILL

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, 

3 SECTION 1. CLARIFICATION OF STATUS OF CERTAIN ORGA4 NIZATIONS AND RETIREMENT PLANS. 

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

6 law— 

7 (1) the organization described in subsection 

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

9 organization shall be treated as an organization de-
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•S 2589 IS 

1 scribed in section 414(e)(3)(A) of the Internal Rev2 enue Code of 1986 with respect to its maintenance 

3 of benefit plans of the eligible organization, and 

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

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

6 was maintained by the organization described in 

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

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

9 which is maintained by an organization described in 

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

11 (b) SPECIAL RULES RELATING TO RETIREMENT

12 PLANS.— 

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

14 the case of a retirement plan which allows contribu15 tions to be made under a salary reduction agreement 

16 and which is treated as a church plan under sub17 section (a)— 

18 (A) such treatment shall not apply for pur19 poses of section 415(c)(7) of the Internal Rev20 enue Code of 1986, and 

21 (B) any account maintained for a partici22 pant or beneficiary of such plan shall be treated 

23 as a retirement income account described in 

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

25 such account shall not, for purposes of section 
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•S 2589 IS 

1 403(b)(12) of such Code, be treated as a con2 tract purchased by a church for purposes of 

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

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

5 case of a retirement plan subject to the requirements 

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

7 church plan under subsection (a)— 

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

9 by the organization described in subsection 

10 (c)(5) maintaining the retirement plan of the el11 igible organization)— 

12 (i) shall be treated as a defined con13 tribution plan which is a money purchase 

14 pension plan, and 

15 (ii) shall be treated as having made 

16 an election under section 410(d) of such 

17 Code for plan years beginning after De18 cember 31, 2005, except that notwith19 standing the election— 

20 (I) nothing in the Employee Re21 tirement Income Security Act of 1974 

22 shall prohibit the plan from commin23 gling for investment purposes its as24 sets with any other assets of the orga25 nization described in subsection (c)(5) 
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•S 2589 IS 

1 maintaining the retirement plan of the 

2 eligible organization (or of plans 

3 maintained by it), and 

4 (II) nothing in this section shall 

5 be construed as subjecting such other 

6 assets to any provision of such Act, 

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

8 417 of such Code or section 205 of such Act, 

9 such plan may offer a lump-sum distribution 

10 option to participants who have not attained 

11 age 55 without offering such participants an 

12 annuity option, and 

13 (C) any account maintained for a partici14 pant or beneficiary of such plan shall, for pur15 poses of section 401(a)(9) of such Code, be 

16 treated as a retirement income account de17 scribed in section 403(b)(9) of such Code. 

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

19 section, the term ‘‘eligible organization’’ means any orga20 nization if, as of January 1, 2003— 

21 (1) more than 1 church recognizes employment 

22 at the organization by a duly ordained, commis23 sioned, or licensed minister as service in the exercise 

24 of the minister’s ministry, 
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1 (2) at least 1 nationally or internationally rec2 ognized church association includes the organization 

3 (or its national or international representative body) 

4 in its directory of participating or founding organi5 zations, 

6 (3) such organization or national representative 

7 body thereof is part of an ecumenical movement 

8 (founded in the nineteenth century) to promote 

9 worldwide fellowship united by common loyalty to 

10 certain religious values, 

11 (4) such organization’s national representative 

12 body has chartered at least 1 organization that pro13 vides educational, recreational, social and religious 

14 support to the armed forces of the United States, 

15 and 

16 (5) the organization has a retirement plan 

17 which is administered by an organization— 

18 (A) which was established by State law by 

19 a special act of the legislature and subject to 

20 certain provisions of the State’s insurance law, 

21 (B) the principal purpose or function of 

22 which is the administration or funding of a plan 

23 or program for the provision of retirement ben24 efits or welfare benefits, or both, for employees 

25 of the eligible organization, 
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1 (C) is treated as an entity exempt from tax 

2 under section 501(m) of the Internal Revenue 

3 Code of 1986 without regard to the application 

4 of subsection (a), and 

5 (D) whose organizing documents are 

6 amended no later than January 1, 2006, to re7 quire that, for plan years beginning on or after 

8 such date, the greater of 2 trustees or 10 per9 cent of the membership of its board of trustees 

10 be associated with a church. 

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

12 church may include past or present service as an officer 

13 or board member of a church (within the meaning of sec14 tion 3121(w)(3)(A) of such Code) or a church-controlled 

15 organization (within the meaning of section 

16 3121(w)(3)(B) of such Code). 

17 (d) EFFECTIVE DATE.—The provisions of this sec18 tion shall apply to plan years beginning after December 

19 31, 2003.

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