Are Your Church's Retirement Benefits "Legal?"
Congregations are legal entities required to comply with all sorts of legal requirements. While religious institutions might be exempt from a FEW legal requirements, churches are NOT exempt from most. This includes many requirements stemming from being an employer.
This post pertains to the UU Organizations Retirement Plan.
Our plan is a 401(a)/401(k) non-electing church plan. It is governed by IRS and US Labor Department rules. It is also governed by a plan document that every participating congregation has adopted/re-adopted in 2014 or 2015. In adopting our plan, by motion of your governing board, your congregation committed to abide by the rules of the plan (and hopefully federal regulations).
What Does This mean?
- All employees (and all means all) must be offered enrollment in the plan for purposes of making their own employee contributions toward their retirement.
- All new employees, who never worked for a UUA-related organization before, MUST receive employer contributions after meeting the requirement of 12 months of employment during which they worked 1,000 hours or more. If someone previously worked for a UUA-related organization and was enrolled in our plan, then they must receive employer contributions from day one of employment. New ministers who completed a UUA-related internship are also eligible immediately. After meeting the 1,000 hour/12 month requirement, if anyone's hours are reduced, they still receive employer contributions. Essentially, once in our plan, always in our plan.
- Personnel policies that limit eligibility for retirement benefits to certain employees DO NOT TRUMP THE UUA REQUIREMENTS. Our requirements rule, and congregations agreed to that when they signed on to our plan.
- All employees eligible for employer contributions must receive the SAME percentage contribution. THE MINISTER CAN NOT RECEIVE 10% OR MORE WHILE EVERYONE ELSE RECEIVES 5%. This is not allowed by our plan and in violation of IRS regulations. I am happy to discuss this with anyone who finds their congregation in this situation.
- The minimum employer contribution is 5%. 86% of congregations contribute 10% or more. Fair Compensation requires an offer of 10% or more. People need to put away 14% of their salary to ensure the possibility of retirement.
If you believe your congregation might be in violation of these policies, please contact me, rnugent [at] uua [dot] org, to discuss how you can legally come into compliance.
For any questions about our plan, the very helpful and informative Linda Rose directs our retirement plan. As a spouse of a UU minister, Linda understands congregational dynamics. Linda can be reached at retirement [at] uua [dot] org.
We at the UUA are appreciative of all the hard work you do, and the challenge of keeping up with administrative details.