Fifth in an Executive Series on the New 403(b) Regulations (Church plans)

We have noted that change is a reality in retirement plans for 501(c)(3) ministries*.

Both the key themes and your involvement were outlined. You have taken the Executive Survey to help evaluate your situation. So now we turn to these issues and how they impact Church plans. We deal with this in a separate communiqué because there are similar ministries, providing the same services where one is a church and one is not, according to their status with the IRS.

First let me connect the dots between legal requirements (thou shalt) and Best Practice. Usually the "thou shalts" and the "thou shoulds" are fairly close together. We have a situation now in Church plans where the connection is not as obvious. Let me give you an example using the issues of Plan Documents, Summary Plan Description and Board Resolutions.

There has not been and is not now a "thou shalt" for churches to have a formalized Plan Document, Summary Plan Description and/or Board Resolution for their retirement plan. While now it is a "though shalt" for all other ministries, those with a church designation are not "required" to have a formal document.

However, the Service (IRS) indicates, and regulations support this, that not having a formal plan document does not mean that you do not have an identifiable plan, a de facto plan. The regulations indicate that the collection of separate documents which speak to any issues regarding the plan can be taken as a whole to create the substance of a plan. This would include emails, internal memos, policy statements, generally understood policies and procedures, board minutes, agreements with vendors, contracts and the like. Upon audit, the Service will use the identifiable plan, the de facto plan, as the basis for judging the administration and compliance of your plan with the law. Fiduciary responsibility is not limited due to the absence of a formal Plan Document.

As you can see, in this instance, the themes and responsibilities previously outlined continue to be important even if a similar specific act or document is not required.

So what does "Best Practices" mean?

Best Practices means the finest, unsurpassed, most effective ways or methods to affect the design, implementation and administration of an activity, in this case the ministry's retirement plan.

In our next communiqué we will continue with church plans issues and answers.

Blessings as we enter a whole new world together,

Envoy Financial
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