Coalition Seeks to End Disruption for Some Church Plan Participants

November 4, 2019

The Honorable David Kautter
Assistant Secretary for Tax Policy
U.S. Department of the Treasury
1500 Pennsylvania Avenue NW
Washington, DC 20220

Dear Assistant Secretary Kautter,

On behalf of the Church Alliance, thank you for meeting with us on October 2 regarding an issue impacting church workers and ministries in church 403(b)(9) plans. As discussed, a relatively recent IRS change of position has raised significant and urgent questions about the ability of certain church-affiliated ministries to continue to participate in church 403(b)(9) plans.

Our coalition of the chief executive officers of 37 church benefits boards represents a broad spectrum of religious organizations, including mainline and evangelical Protestant denominations, three Jewish groups, and some Catholic schools and institutions. Church Alliance members provide employee benefits to approximately one million clergy, lay workers, and their families, serving over 155,000 churches, synagogues, and affiliated organizations such as schools, colleges and universities, nursing homes, children's homes, homeless shelters, food banks, and other ministries.

For over 30 years, church 403(b)(9) retirement plans have offered cost-effective savings and investment options that reflect the faith traditions of their sponsoring denominations. Participants in these plans, who serve in a wide variety of ministries, depend upon the unique features of these plans, including the ability to screen their investments in accordance with their religious beliefs and to “self-annuitize” their retirement benefits, to provide them stability in retirement. Importantly, for decades church workers have had access to these plans as they moved from ministry to ministry within their denomination.

Unfortunately, the IRS position change has created significant disruption that must urgently be addressed, in order for church 403(b)(9) plans to continue to serve the broad scope of ministries they have served for decades. We estimate that across the Church Alliance, there are more than 1,400 ministries currently participating in 403(b)(9) plans, with hundreds of thousands of church workers, who may be negatively impacted by this interpretation.

The Church Alliance has been working with a bicameral, bipartisan group of Members of Congress to address this issue for several years, both through standalone legislation introduced by Senators Pat Roberts (R-KS), Mike Crapo (R-ID) and Ben Cardin (D-MD) and by inclusion of the clarifying language in the Setting Every Community Up for Retirement Enhancement (SECURE) Act (H.R. 1994), the Retirement Enhancement and Savings Act of 2019 (“RESA,” H.R. 1007) and the Family Savings Act of 2019 (H.R. 1084). While progress has been made towards passage of the SECURE Act, the need to address this issue is becoming increasingly critical. It unnecessarily creates significant burdens on ministries and church workers, which interferes with the good work they are called to do, and diminishes their retirement security.

We appreciate your support for passage of the SECURE Act and, in the event that Congress is not able to pass legislation to address this issue before the end of the year, we look forward to continuing our discussion with you on potential alternative approaches for temporary relief.

Thank you and we look forward to serving as a resource on this and other church plan-related issues.

Sincerely,

James F. (Jim) Sanft
Chair of the Church Alliance
Washington, DC