Church plans will have to notify plan participants before asking the Internal Revenue Service (IRS) to provide private letter rulings confirming the plans’ status.

The IRS has spelled out church plan letter ruling application rules in IRS Revenue Ruling 2011-44.

Section 414(e) of the Internal Revenue Code (IRC) defines a church plan as a plan for that covers church employees and the employees’ beneficiaries, or the employees of a tax-exempt association of churches and those employees’ beneficiaries.

IRC Section 410(d) lets church plans decide whether to be a “qualified church plan” or a “nonelecting church plan.”

A “nonelecting church plan” that chooses not come under the Employee Retirement Income Security Act (ERISA) need not meet the tax code requirements that normally apply to 401(k) plans, such as minimum vesting requirements and minimum participation requirements.

A nonelecting church plan that happens to be a defined benefit pension plan can stay out of the Pension Benefit Guaranty Corp. pension insurance program.

But a nonelecting church plan could be subject to state benefit plan laws, and it does not qualify for the same tax breaks that a qualified church plan gets.

Although a church plan does not have to get a private letter ruling from the IRS confirming whether it is a qualified plan or a nonelecting plan, many plans get the rulings for tax purposes.

The IRS believes participants in a church plan seeking confirmation of nonelecting status should get advance notice, because of the fact that a nonelecting church plan is not subject to ERISA or ERISA plan tax code requirements.

Recipients should get the notice within 30 days before a plan submits a letter ruling request to the IRS, and recipients should have 60 calendar days to file comments with the IRS, officials say.

If a plan makes a reasonable effort to meet the notice requirements, the failure of one or more interested persons to receive the required notice will not cause a violation of the notice requirement.

“Interested persons” includes organizations representing plan participants as well as plan participants, beneficiaries and alternate payees.

The procedure applies to ruling requests received after Sept. 26, 2011, and to ruling requests pending with the IRS as of Sept. 26, 2011.

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