Request for Information – Review of Regulations (July 31, 2017)
The Church Alliance submitted comments to the Department of the Treasury (“Treasury”) in response to a request for recommendations on Treasury Regulations that may be eliminated, modified, or streamlined to reduce burdens. The comment letter explains to Treasury that there is an urgent need to modify regulations under Section 403(b) of the Internal Revenue Code (“Code”), which are creating substantial burdens for clergy, church lay workers, and ministries that participate in 403(b)(9) plans. Specifically, under an Internal Revenue Service (“IRS”) interpretation of the regulations, certain church-associated organizations that are not described in Code section 3121(w)(3)(B) – commonly referred to as “non-QCCOs” – cannot participate in 403(b)(9) “retirement income account” plans. This IRS interpretation, which was recently learned by the church benefits community, raises considerable concern and burdens, and is inconsistent not only with Congress’s intent when adding section 403(b)(9) to the Code, but also with decades of previous practices of the IRS and the church benefits community. The comment letter describes the burdens imposed on the church benefits community, provides legal support for the Church Alliance’s position, and proposes modifications to the regulations that would eliminate the burdens.