Churches of God, General Conference Pension Plan

403(b) Regulation Resources
for Non-Qualified
Church-Controlled Organizations (NQCCO)

For use by non-qualified employers who do not exclusively use the CGGC Pension Plan but use other retirement plan providers.

CLICK HERE for QCCO and NQCCO definitions

This information should not be considered tax or legal advice. The Board of Pensions stands ready to assist your organization as you work with your legal and tax advisers by providing resource information that you and your adviser may find beneficial.

The issuance of final 403(b) regulations caused a shift in employers’ responsibilities for the administration and compliance of 403(b) plans.  Effective January 1, 2009, the IRS treats each “employer” as responsible for maintaining the “plan” for its employees and also for managing all 403(b) providers.  If the Churches of God, General Conference (CGGC) Pension Plan is just one of multiple 403(b) arrangements available to your organization’s employees, your organization will be responsible for a separately written “403(b) plan document “ (which incorporates the multi-vendor relationships) and for vendor compliance coordination.  The organization can designate compliance and other administrative responsibilities to a Third-Party Administrator (TPA) or one of the vendors, if agreed.  The Board of Pensions does not serve as a TPA for multi-vendor arrangements. 

The CGGC Pension Plan that your organization provides to its employees is a valuable benefit to them and for your organization as you seek to retain talented, energetic staff.  Typically, CGGC employers use this plan as their sole retirement plan provider - and compliance becomes less of a task.  For employers allowing multiple 403(b) arrangements for their employees, compliance may require considerably more effort.  You will want to work with your legal counsel, your other 403(b) providers and the Board of Pensions to understand and comply with these new regulations so that your organization and retirement plan participants avoid adverse tax consequences.  Below, you will find summarized explanations of regulations that impact your organization as you move toward compliance.

Written Plan Document Requirement

Organizations that provide a 403(b) plan must maintain written documents that describe all material plan provisions.   On or before December 31, 2009, the individual organization must adopt a written plan that incorporates all vendor arrangements. The provisions of this plan must be effective January 1, 2009. This written plan must conform to the new regulations by addressing provisions including, but not limited to:

·         Identification of eligible employees

·         Statutory (legal) contributions limits

·         Time and form of benefits

·         Distribution restrictions

·         List of 403(b) service provider(s) allowed by the employer

The written plan can incorporate materials from other documents such as written policies, employee handbook descriptions and other related documents.  The Board of Pensions provides general plan documentation for the Church of God Pension Plan.  However, since each employer in the Church of God Pension Plan has flexibility related to certain plan provisions, your organization must develop and maintain additional written rules and procedures regarding your arrangements that address:

To help you with this, the Board of Pensions has prepared an Eligibility and Participation Schedule to document the additional written rules and procedures, unique to your organization, that relate to your use of the CGGC Retirement Plan.  You should print out a copy of this Schedule and fill it out as soon as possible so that it is properly implemented as of January 1, 2009.  This Schedule is considered part of your organization’s 403(b) plan.  That means that any time you change any provisions that relate to your participation in the plan, you must complete an updated Schedule.  You do not have to send this Schedule to the Board of Pensions but you do need to be sure to keep an updated copy in your files at all times.  And, of course, you will need to be sure that you follow the rules and procedures that you set out in the Schedule.    

Additional Actions Required

There are more steps for your organization to complete if it makes contributions to more than one 403(b) retirement plan provider (or has made such contributions at any time since the beginning of 2005):

The purpose of the requirements for sharing information is to exchange information necessary to satisfy the Regulations and other tax requirements of the Code.  Such information includes, but is not limited to: 

This information sharing requirement is very important because beginning January 1, 2009, employers are responsible for ensuring overall compliance with statutory and regulatory requirements.  If your organization offers more than one 403(b) provider for its employees, the Board of Pensions is limited in the guidance we can give.  In this situation, we welcome inquiries and may assist with general information that could be helpful to the employer’s own legal counsel.  But the employer is responsible for coordinating compliance among the different 403(b) providers.    

If your organization makes contributions to the CGGC Retirement Plan as a sole retirement plan provider, there is no need to coordinate compliance among multiple 403(b) providers.  In this situation, the Board of Pensions can do more to help ensure that your organization’s plan complies with all legal requirements.  However, your organization will still have to provide information to the Board of Pensions so that it can ensure compliance.

Timing of In-service Distributions from Employer Contribution Accounts

This provision impacts plans that allow employees to withdraw employer-contributed dollars while still in service to that employer without the occurrence of some event, such as reaching a specified age.  Since the CGGC Pension Plan does not make provision for in-service withdrawals of employer dollars, this regulation change is already satisfied for churches that use only the CGGC Pension Plan.

New Definition of Severance from Employment

The new regulations provide some additional clarity to legal terms and phrases, one of which is “severance from employment.”  For most churches and for employers that are simple single legal entities, this change will have no impact.  The definition of “severance from employment” becomes important for certain plan provisions regarding distributions.   

Universal Availability

Certain 403(b) plans are subject to annual retirement plan nondiscrimination testing that demonstrates the plan does not discriminate in favor of highly compensated employees in design or practice.  Plans subject to testing include 403(b) plans of employers such as nonprofit hospitals, colleges, universities and some children’s and retirement homes.  Under one of these nondiscrimination rules, plans of these employers must satisfy the “universal availability” requirement.  In simple terms this means that if you allow one employee to make personal tax-deferred contributions (salary reduction deferrals) to the plan, you must let all employees make personal tax-deferred contributions.  Certain limited groups of employees can be excluded from making personal tax-deferred contributions to the plan, and these exclusions must be stated in the written plan document.  For example, one of the groups of employees that can be excluded from the universal availability requirement is, “employees who normally work fewer than 20 hours per week.  Violation of the universal availability rule is best avoided by allowing all employees to make Participant Before-Tax Contributions (salary reduction deferrals) to the plan.

Effective Opportunity Required

As a part of the universal availability requirement, the IRS wants to ensure that employers take steps to make all employees aware of their right to participate in the retirement plan. Therefore, the new regulations require employers to demonstrate that employees are being provided with “an effective opportunity” to make elective deferrals (personal tax-sheltered contributions).  According to the IRS, whether this standard is being met depends on specific “facts and circumstances” such as whether the employer provides ongoing notice to employees of the opportunity to make elective deferrals.  In essence, the regulations are sending a message to all employers to make, and continue making, employees aware of the tax deferral opportunities available to them under their retirement plan.  This is the responsibility of the employer.  The Board of Pensions and other 403(b) providers are not responsible for making sure that all employees are provided with this notice.

Requirement to Follow Plan Terms

As mentioned earlier, all 403(b) plans must be documented in writing.  A failure to follow these written plan provisions can result in adverse tax consequences for individual plan participants and/or all plan participants, depending upon the nature of the failure.

Other Possible Compliance Concerns

There are other compliance issues that could arise if your organization allows contributions to be made to multiple 403(b) investment providers and if transfers of money are permitted between these 403(b) providers. Money can still be moved, but there are now additional requirements on any such movement of 403(b) plan assets.

For example, some 403(b) investment providers may permit employees to make “contract exchanges”.  A “contract exchange” is a movement of a participant’s plan account from a 403(b) investment provider that is approved to receive ongoing contributions under the employer’s 403(b) plan (i.e., a 403(b) provider that has a “payroll slot”) to a 403(b) investment provider that is not approved to receive ongoing contributions.  The CGGC Pension Plan does not permit such contract exchanges to be made with any accounts that are held by the Board of Pensions but other 403(b) investment providers may permit contract exchanges to be made with accounts that they are holding.  There are several additional requirements that apply to contract exchanges and you should discuss these requirements with your organization’s legal counsel before approving any such exchanges. 

Summary of the Final Regulations

Frequently Asked Questions about the 403(b) Regulations

Eligibility and Participation Schedule

Advantages of the 403(b)(9) Churches of God Pension Plan

Non-Qualified Church-Controlled Organization - defined

Enrollment and Information Schedule (PDF format)

Churches of God, General Conference Pensions Home Page