Courts, Rather Than IRS, May Be Arbiter Of Church Plan Exemption, Practitioners Say

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By Florence Olsen

Recent Internal Revenue Service rulings on the “church plan” status of retirement plans sponsored by large hospital systems, including a ruling apparently received by the Saint Peter's Healthcare System Retirement Plan, indicate that the IRS is disinclined to modify its long-standing interpretation of church plan exemption under federal pension law, practitioners told BNA Aug. 23.

“This is an obvious setback for the St. Peter's plan participants who were fighting for the IRS to go their way,” said Thomas E. Clark Jr., chief compliance officer at FRA PlanTools, a fiduciary consulting company.

The IRS appears to have issued a ruling granting church plan status to the Saint Peter's Healthcare System Retirement Plan, according to an Aug. 22 participant letter that BNA obtained (164 DTR G-7, 8/23/13). BNA was unable to obtain a copy of the IRS ruling.

The key takeaway from recent church plan rulings for sponsors of church plans is that they should adhere to the structural requirements described in the rulings, said Ralph E. DeJong, a partner at McDermott Will & Emery in Chicago.

The full text of the Kaplan v. Saint Peter's Healthcare System complaint is at

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