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CURRENT ISSUE: april-may 2009


EveryOne:Reaching Farther Together







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IRS Compliance

is your church irs compliant?

by D. Ray Lewis


Read more about the Free Will Baptist Board of Retirement at



The retirement plan your church/agency provides its ministers and staff is a valuable benefit to them, and to the employer seeking to retain talented, energetic staff. Last year the Internal Revenue Service (IRS) issued new regulations that provide the most significant changes for 403(b) retirement plans in over 40 years.

These Regulations went into effect on January 1, 2009, and affect every church, Christian school/college, and state/national agency that sends money to ANY 403(b) retirement plan for its employees.

In the past, the role of the employer has mostly been limited to sending contributions to an account set up by an employee. Under the new regulations the employer must take a more active role in monitoring 403(b) arrangements to ensure that the retirement plan is in compliance with the new regulations. Failure to provide proper oversight, as prescribed, puts the employees’ funds at risk of immediate taxation.


IRS Compliance


Areas where the employer may have added responsibilities include, but are not limited to:

  • Monitoring annual contribution limits for all plans

  • Monitoring distributions, including loans, hardship withdrawals, and required minimum distributions for each 403(b) plan

  • Ensuring timely remittance of contributions to vendors

The Board of Retirement will provide support for those adopting the Free Will Baptist Plan. If you offer other plans or programs, you must work with the other vendors to bring them into compliance with the new regulations.

The new regulations are not difficult to implement if the church's retirement plan is solely with the Free Will Baptist Board of Retirement. In fact, to become fully compliant, many employers will need to invest less than an hour. Below are some of the regulations that impact the church.


Written Plan Document Requirement

Churches/employers that send contributions to more than one 403(b) plan for its employees must maintain a written plan document that describes all material plan provisions.
The Board of Retirement provides general plan documentation for the Free Will Baptist Plan. However, since each church in this plan has flexibility related to certain plan provisions, the church must complete and retain a copy of an Eligibility and Participation Schedule (available at that includes rules and procedures addressing:

  • What income sources will be considered as compensation?

  • Which employees are eligible to participate in the retirement plan?

  • What contributions will the employer/church make on behalf of employees?


Information sharing requirement

Participants, employers and plan providers have more steps to complete if the employer makes contributions to more than one investment provider or allows plan participants to move money from one 403(b) investment provider to another while in-service. There are new requirements for sharing information:

  • If you allow contributions to be made to multiple investment providers, you may need to share information with the providers.

  • If you allow participants to move their accounts from one investment provider to another, you may need a written Information Sharing Agreement.

  • If you have multiple investment providers, you will need to identify and list all investment providers approved for ongoing contributions and those approved for contract exchanges only.

The Board of Retirement makes compliance easy!

If an employer makes contributions to the Board of Retirement as the sole provider and do not permit participants to move money to other investment providers, an Information Sharing Agreement between investment providers will not be needed. The employees can still move money from other retirement plans or IRAs tax-free through a direct rollover.

The Board of Retirement has been dedicated to enhancing the financial security of our plan participants for almost 40 years. Our employees stand ready to help you. Please email us at or call 877-767-7738 for additional information.


About the Writer: D. Ray Lewis has been the director of the Board of Retirement since 2005. He and his wife Ida live in Antioch, TN.





©2009 ONE Magazine, National Association of Free Will Baptists