1.This Act may be cited as
the Church Plan Clarification Act of
2009
.
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.Automatic
enrollment by church plans
(a)For purposes of section 514(e) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1114(e)), the term plan
shall include an employee benefit plan which is a church plan (as defined in
section 3(33) of such Act or section 414(e) of the Internal Revenue Code of
1986).
(b)This section shall take effect on the date of the enactment
of this Act.
5.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.
6.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.