A church defined benefit pension plan is a retirement plan in which an eligible employee’s fixed benefit is based upon a formula, typically related to their salary history, years of service and/or age at retirement. A church plan is not subject to certain ERISA requirements, such as annual 5500 reporting. The employer is responsible for overseeing the assets in the plan and bears the investment risk. Contributions are typically made by the employer based upon an annual actuarial valuation.
Who can participate?
All employees are eligible to participate unless the plan specifically excludes them.
Types of plan contributions
Usually employer contributions.
Eligibility
The employer has flexibility in determining which employees are eligible. As an example, an employer may impose age and/or service requirements before an employee begins accruing benefits under the plan.
Potential tax advantages
Benefits are generally not taxable until distributed. Retirees who are ministers may have retirement benefits designate as a tax-free housing allowance within legal limits.
To learn more about the retirement plans available to your specific organization, email us or call us at 1-888-98-GUIDE (1-888-984-8433).