1.This Act may be cited as the
Church Plan Clarification Act of
2008
.
2.Application of controlled group rules to
church plans
(a)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)For
purposes
,
and
(2)by adding at the end the following new
paragraph:
(2)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)The amendments made by
this section shall apply to taxable years beginning before, on, or after the
date of the enactment of this Act.
3.Application of contribution and funding
limitations to 403(b) grandfathered defined
benefit plans
(a)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)The amendments made by
this section shall apply as if included in the enactment of the Tax Equity and
Fiscal Responsibility Act of 1982.
4.Allow certain plan transfers and
mergers
(a)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)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)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)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)For purposes of this subsection, the term
church includes an organization described in subparagraph (A) or
(B)(ii) of subsection
(e)(3).
.
(b)The amendment made by
this section shall apply to transfers or mergers occurring after the date of
the enactment of this Act.
5.Investments by church plans in collective
trusts
(a)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)This section shall apply
to investments made after the date of the enactment of this Act.