What is a church plan?

A church plan is an employee benefit plan established by a denomination or an organization such as the Board of Pensions that has as its primary purpose the maintenance and administration of a retirement, medical, and other plans for the benefit of employees of congregations and other organizations controlled by the church or associated with it. 

A key benefit of a church plan is that it allows small church-related employers to participate in a group plan consisting of numerous small and large mission-related employers. This gives employers the opportunity to benefit from the economies of scale in contracting with third-party administrators and professional administration of complicated, regulated, benefits plan programs.

Church plans also are exempt from ERISA (the Employee Retirement Income Security Act of 1974) and certain provisions of the Internal Revenue Code. Exemptions exist because the U.S. Congress and certain states have recognized churches and mission agencies as unique employers, deferring to the constitutional protection of freedom of religion and the separation of church and state. 

These exemptions allow church plans to offer benefits to plan members that ERISA-governed plans would not be permitted to offer and facilitate the Board’s offering of affordable, flexible, portable benefits to the community of Presbyterian-associated employees. Church plans also are exempt from numerous and complex reporting, disclosure, and tax-assessment obligations.

While church plans are exempt from ERISA, state fiduciary law principles continue to apply to protect the plan members and beneficiaries. Church plans are required by law to act solely and exclusively for the benefit of the plan members and their beneficiaries.