Pension & Benefits News IRS provides notice rule for election revocation of church plan aggregation or disaggregation under PATH Act
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Wednesday, November 7, 2018

IRS provides notice rule for election revocation of church plan aggregation or disaggregation under PATH Act

By Pension and Benefits Editorial Staff

If church-related organizations make an aggregation or disaggregation election from treatment as a single employer under Code Sec. 414(c)(2)(C) and (D) and subsequently revoke it, the entity authorized to revoke the election must provide a copy of the revocation to the IRS upon request by the IRS. This rule is effective for revocations of elections made on or after October 22, 2018. Prior to that date, any reasonable method of notifying the IRS concerning revocations of elections under Code Sec. 414(c)(2)(C) and (D) is acceptable.

PATH Act Section 336. Congress made it easier for certain churches and church-related organizations to aggregate or disaggregate for retirement plan nondiscrimination testing purposes by passing Section 336 of the Protecting Americans from Tax Hikes Act of 2015 (PATH Act, P.L. 114-113), which added Code Sec. 414(c)(2)(C) and (D). These special rules provided that certain church plans could—

  • permissively aggregate under Code Sec. 414(c)(2)(C), which allows organizations associated with a church or convention or association of churches and eligible to maintain a church plan to elect to treat the organizations as a single employer even if they would not otherwise be aggregated; and
  • permissively disaggregate under Code Sec. 414(c)(2)(D), which allows an employer to elect to treat entities that are churches or qualified church-controlled organizations separately from other entities, regardless of whether the entities maintain separate church plans.

Code Sec. 414(c)(2) does not require that the IRS be notified of an election. However, IRS must be notified of a revocation of an election.

Comments sought. The Department of the Treasury and the IRS request comments on whether additional guidance under section 336 of the PATH Act would be helpful. Send submissions to CC:PA:LPD:PR, (Notice 2018-81), Room 5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044. Comments may also be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to: Internal Revenue Service, CC:PA:LPD:PR, (Notice 2018-81), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington DC. Alternatively, comments may be submitted via the Internet at [email protected] (Notice 2018 - 81). Please submit written comments by December 21, 2018. All comments will be available for public inspection.

SOURCE: IRS Notice 2018-81.

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