[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3615 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 3615

To amend the Internal Revenue Code of 1986 to clarify the treatment of 
             church pension plans, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

           September 26 (legislative day, September 17), 2008

 Mrs. Hutchison (for herself and Mr. Cardin) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to clarify the treatment of 
             church pension plans, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Church Plan Clarification Act of 
2008''.

SEC. 2. APPLICATION OF CONTROLLED GROUP RULES TO CHURCH PLANS.

    (a) In General.--Section 414(c) of the Internal Revenue Code of 
1986 (relating to employees of partnerships, proprietorships, etc., 
which are under common control) is amended--
            (1) by striking ``For purposes'' and inserting the 
        following:
            ``(1) In general.--For purposes'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Church plans.--For purposes of this subsection, in 
        determining whether an employer who is otherwise eligible to 
        participate in a church plan is treated as a member of a group 
        of entities under common control, such employer (including an 
        organization described in subsection (e)(3)(A)) shall not be 
        treated as under common control with another entity if, based 
        on all of the facts and circumstances, the day-to-day financial 
        and operational activities are not under common control. In 
        determining if such activities are under common control, the 
        Secretary shall consider whether the entities have been 
        historically viewed as distinct entities within the church or 
        convention or association of churches.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning before, on, or after the date of the 
enactment of this Act.

SEC. 3. APPLICATION OF CONTRIBUTION AND FUNDING LIMITATIONS TO 403(B) 
              GRANDFATHERED DEFINED BENEFIT PLANS.

    (a) In General.--Section 251(e)(5) of the Tax Equity and Fiscal 
Responsibility Act of 1982 (relating to special rule for existing 
defined benefit arrangements), Public Law 97-248, is amended--
            (1) by striking ``403(b)(2)'' and inserting ``403(b)'', and
            (2) by inserting before the period at the end the 
        following: ``, and shall be subject to the applicable 
        limitations of section 415(b) of such Code as if it were a 
        defined benefit plan under section 401(a) of such Code and not 
        the limitations of section 415(c) of such Code (relating to 
        limitation for defined contribution plans).''.
    (b) Effective Date.--The amendments made by this section shall 
apply as if included in the enactment of the Tax Equity and Fiscal 
Responsibility Act of 1982.

SEC. 4. ALLOW CERTAIN PLAN TRANSFERS AND MERGERS.

    (a) In General.--Section 414 of the Internal Revenue Code of 1986 
(relating to definitions and special rules) is amended by adding at the 
end the following new subsection:
    ``(y) Certain Plan Transfers and Mergers.--
            ``(1) In general.--Under rules prescribed by the Secretary, 
        except as provided in paragraph (2), no amount shall be 
        includible in gross income by reason of--
                    ``(A) a transfer of all or a portion of the account 
                balance of a participant or beneficiary, whether or not 
                vested, from a plan described in section 401(a), or a 
                retirement income account described in section 
                403(b)(9), which is a church plan described in section 
                414(e) to a retirement income account described in 
                section 403(b)(9), if such plan and account are both 
                maintained by the same church or convention or 
                association of churches;
                    ``(B) a transfer of all or a portion of the account 
                balance of a participant or beneficiary, whether or not 
                vested, from a retirement income account described in 
                section 403(b)(9) to a plan described in section 
                401(a), or a retirement income account described in 
                section 403(b)(9), which is a church plan described in 
                section 414(e), if such plan and account are both 
                maintained by the same church or convention or 
                association of churches, or
                    ``(C) a merger of a plan described in section 
                401(a), or a retirement income account described in 
                section 403(b)(9), which is a church plan described in 
                section 414(e) with a retirement income account 
                described in section 403(b)(9), if such plan and 
                account are both maintained by the same church or 
                convention or association of churches.
            ``(2) Limitation.--Paragraph (1) shall not apply to a 
        transfer or merger unless the participant's or beneficiary's 
        benefit immediately after the transfer or merger is equal to or 
        greater than the participant's or beneficiary's benefit 
        immediately before the transfer or merger.
            ``(3) Qualification.--A plan or account shall not fail to 
        be considered to be described in sections 401(a) or 403(b)(9) 
        merely because such plan or account engages in a transfer or 
        merger described in this subsection.
            ``(4) Definition of church.--For purposes of this 
        subsection, the term `church' includes an organization 
        described in subparagraph (A) or (B)(ii) of subsection 
        (e)(3).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to transfers or mergers occurring after the date of the enactment of 
this Act.

SEC. 5. INVESTMENTS BY CHURCH PLANS IN COLLECTIVE TRUSTS.

    (a) In General.--In the case of--
            (1) a church plan (as defined in section 414(e) of the 
        Internal Revenue Code 1986), including a plan described in 
        section 401(a) of such Code and a retirement income account 
        described in section 403(b)(9) of such Code, and
            (2) an organization described in section 414(e)(3)(A) of 
        such Code the principal purpose or function of which is the 
        administration of such a plan or account,
the assets of such plan, account, or organization (including any assets 
otherwise permitted to be commingled for investment purposes with the 
assets of such a plan, account, or organization) may be invested in a 
group trust otherwise described in Internal Revenue Service Revenue 
Ruling 81-100 ( as modified by Internal Revenue Service Revenue Ruling 
2004-67), or any subsequent revenue ruling that supersedes or modifies 
such revenue ruling, without adversely affecting the tax status of the 
group trust, such plan, account, or organization, or any other plan or 
trust that invests in the group trust.
    (b) Effective Date.--This section shall apply to investments made 
after the date of the enactment of this Act.
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