Church, Government Plans Get Break From IRS

December 28, 2000 ( - Church and certain governmental plans will have another year to deal with non-discrimination rules, according to the Internal Revenue Service.

According to Notice 2001-9, the IRS is postponing the application of Internal Revenue Code non-discrimination rules for plan years beginning on or after January 1, 2002.  The rules were originally scheduled to be effective for plan years beginning on or after January 1, 2001, according to BNA.

Government plans covered include:

  • plans maintained by the United States
  • plans financed under the Railroad Retirement Act
  • plans of certain international organizations

Plans of state and local governments are generally exempt from the non-discrimination requirements, according to the IRS.

Church plans covered include plans of a church, or an exempt association of churches, which has not elected to be subject to particular pension requirements.

Churches may elect to have rules concerning participation, vesting, and funding apply to their plans, according to the notice.  For plan years that begin before the new effective date, IRS said non-electing church plans must be operated under a reasonable, good faith interpretation of the non-discrimination rules in the tax code, according to BNA.

Notice 2001-9 will be published in Internal Revenue Bulletin 2001-4, dated Jan. 22.

– Nevin Adams

For a copy of the Notice