,,ii #aacth ,,congress #ast ,session ,s4 #ieb ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,may #ad1 #bjac ,mr4 ,cardin 7for himself and ,mr4 ,portman7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to clarify the treatment of church pension plans1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,church ,plan ,clarification ,act of #bjac4 #b4 ,church plan clarification 7a7 ,application of controlled group rules to church plans 7#a7 ,in general ,section #dad7;c7 of the ,internal ,revenue ,code of #aihf is amended-- 7,a7 by striking ,for purposes and inserting the following3 7#a7 ,in general ,for purposes 1 and 7,b7 by adding at the end the following new paragraph3 7#b7 ,church plans 7,a7 ,general ,rule ,except as provided in subparagraphs 7,b7 and 7,c71 for purposes of this subsection and subsection 7m71 an organization that is otherwise eligible to participate in a church plan as defined in subsection 7e7 shall not be aggregated with another such organization and treated as a single employer with such other organization unless-- 7i7 one such organization provides directly or indirectly at least #hj percent of the operating funds for the other organization during the preceding tax year of the recipient organization1 and 7ii7 there is a degree of common management or supervision between the organizations4 ,for purposes of this subparagraph1 a degree of common management or supervision exists only if the organization providing the operating funds is directly involved in the day-to-day operations of the other organization4 7,b7 ,nonqualified ,church-,controlled ,organizations ,notwithstanding the provisions of subparagraph 7,a71 for purposes of this subsection and subsection 7m71 an organization that is a nonqualified church-controlled organization shall be aggregated with one or more other nonqualified church-controlled organizations1 or with an organization that is not exempt from tax under section #eja1 and treated as a single employer with such other organizations1 if at least #hj percent of the directors or trustees of such organizations are either representatives of1 or directly or indirectly controlled by1 the first organization4 ,for purposes of this subparagraph1 a nonqualified church controlled organization shall mean a church-controlled organization described in section #eja7;c77#c7 that is not a qualified church-controlled organization described in section #caba7w77#c77;,b74 7,c7 ,permissive ,aggregation ,among ,church-,related ,organizations ,organizations described in subparagraph 7,a7 may elect to be treated as under common control for purposes of this subsection4 ,such election shall be made by the church or convention or association of churches with which such organizations are associated within the meaning of subsection 7e77#c77;,d71 or by an organization determined by such church or convention or association of churches to be the appropriate organization for making such election4 7,d7 ,permissive ,disaggregation of ,church-,related ,organizations ,for purposes of subparagraph 7,a71 in the case of a church plan 7as defined in subsection 7e771 any employer may permissively disaggregate those entities that are not churches 7as defined in section #djc7;b77#ab77;,b77 separately from those entities that are churches1 even if such entities maintain separate church plans4 7,e7 ,anti-,abuse ,rule ,for purposes of subparagraphs 7,a7 and 7,b71 the anti-abuse rule in ,treasury ,regulation section #a4dad7;c7-#e7;f7 shall apply4 4 7#b7 ,effective date ,the amendments made by this subsection shall apply to taxable years beginning before1 on1 or after the date of the enactment of this ,act4 7b7 ,application of contribution and funding limitations to #djc7;b7 grandfathered defined benefit plans 7#a7 ,in general ,section #bea7;e77#e7 of the ,tax ,equity and ,fiscal ,responsibility ,act of #aihb 7,public ,law #ig-bdh71 is amended-- 7,a7 by striking #djc7;b77#b7 and inserting #djc7;b71 and 7,b7 by inserting before the period at the end the following3 1 and shall be subject to the applicable limitations of section #dae7;b7 of such ,code as if it were a defined benefit plan under section #dja7;a7 of such ,code and not the limitations of section #dae7;c7 of such ,code 7relating to limitation for defined contribution plans744 7#b7 ,effective date ,the amendments made by this subsection shall apply as if included in the enactment of the ,tax ,equity and ,fiscal ,responsibility ,act of #aihb4 7c7 ,automatic enrollment by church plans 7#a7 ,in general ,this subsection shall supersede any law of a ,state that relates to wage1 salary1 or payroll payment1 collection1 deduction1 garnishment1 assignment1 or withholding which would directly or indirectly prohibit or restrict the inclusion in any church plan 7as defined in this subsection7 of an automatic contribution arrangement4 7#b7 ,definition of automatic contribution arrangement ,for purposes of this subsection1 the term automatic contribution arrangement means an arrangement-- 7,a7 under which a participant may elect to have the plan sponsor make payments as contributions under the plan on behalf of the participant1 or to the participant directly in cash1 and 7,b7 under which a participant is treated as having elected to have the plan sponsor make such contributions in an amount equal to a uniform percentage of compensation provided under the plan until the participant specifically elects not to have such contributions made 7or specifically elects to have such contributions made at a different percentage74 7#c7 ,notice requirements 7,a7 ,in general ,the plan administrator of an automatic contribution arrangement shall1 within a reasonable period before such plan year1 provide to each participant to whom the arrangement applies for such plan year notice of the participant's rights and obligations under the arrangement which-- 7i7 is sufficiently accurate and comprehensive to apprise the participant of such rights and obligations1 and 7ii7 is written in a manner calculated to be understood by the average participant to whom the arrangement applies4 7,b7 ,election requirements ,a notice shall not be treated as meeting the requirements of subparagraph 7,a7 with respect to a participant unless-- 7i7 the notice includes an explanation of the participant's right under the arrangement not to have elective contributions made on the participant's behalf 7or to elect to have such contributions made at a different percentage71 7ii7 the participant has a reasonable period of time1 after receipt of the notice described in clause 7i7 and before the first elective contribution is made1 to make such election1 and 7iii7 the notice explains how contributions made under the arrangement will be invested in the absence of any investment election by the participant4 7#d7 ,effective date ,this subsection shall take effect on the date of the enactment of this ,act4 7d7 ,allow certain plan transfers and mergers 7#a7 ,in general ,section #dad of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7y7 ,certain plan transfers and mergers 7#a7 ,in general ,under rules prescribed by the ,secretary1 except as provided in paragraph 7#b71 no amount shall be includible in gross income by reason of-- 7,a7 a transfer of all or a portion of the account balance of a participant or beneficiary1 whether or not vested1 from a plan described in section #dja7;a7 or an annuity contract described in section #djc7;b71 which is a church plan described in subsection 7e7 to an annuity contract described in section #djc7;b71 if such plan and annuity contract are both maintained by the same church or convention or association of churches1 7,b7 a transfer of all or a portion of the account balance of a participant or beneficiary1 whether or not vested1 from an annuity contract described in section #djc7;b7 to a plan described in section #dja7;a7 or an annuity contract described in section #djc7;b71 which is a church plan described in subsection 7e71 if such plan and annuity contract are both maintained by the same church or convention or association of churches1 or 7,c7 a merger of a plan described in section #dja7;a71 or an annuity contract described in section #djc7;b71 which is a church plan described in subsection 7e7 with an annuity contract described in section #djc7;b71 if such plan and annuity contract are both maintained by the same church or convention or association of churches4 7#b7 ,limitation ,paragraph 7#a7 shall not apply to a transfer or merger unless the participant's or beneficiary's benefit immediately after the transfer or merger is equal to or greater than the participant's or beneficiary's benefit immediately before the transfer or merger4 7#c7 ,qualification ,a plan or annuity contract shall not fail to be considered to be described in sections #dja7;a7 or #djc7;b7 merely because such plan or account engages in a transfer or merger described in this subsection4 7#d7 ,definitions ,for purposes of this subsection3 7,a7 ,church ,the term church includes an organization described in subparagraph 7,a7 or 7,b77ii7 of subsection 7e77#c74 7,b7 ,annuity contract ,the term annuity contract includes a custodial account described in section #djc7;b77#g7 and a retirement income account described in section #djc7;b77#i74 4 7#b7 ,effective date ,the amendment made by this subsection shall apply to transfers or mergers occurring after the date of the enactment of this ,act4 7e7 ,investments by church plans in collective trusts 7#a7 ,in general ,in the case of-- 7,a7 a church plan 7as defined in section #dad7;e7 of the ,internal ,revenue ,code of #aihf71 including a plan described in section #dja7;a7 of such ,code and a retirement income account described in section #djc7;b77#i7 of such ,code1 and 7,b7 an organization described in section #dad7;e77#c77;,a7 of such ,code the principal purpose or function of which is the administration of such a plan or account1 the assets of such plan1 account1 or organization 7including any assets otherwise permitted to be commingled for investment purposes with the assets of such a plan1 account1 or organization7 may be invested in a group trust otherwise described in ,internal ,revenue ,service ,revenue ,ruling #ha-ajj 7as modified by ,internal ,revenue ,service ,revenue ,rulings #bjjd-fg and #bjaa-a71 or any subsequent revenue ruling that supersedes or modifies such revenue ruling1 without adversely affecting the tax status of the group trust1 such plan1 account1 or organization1 or any other plan or trust that invests in the group trust4 7#b7 ,effective date ,this subsection shall apply to investments made after the date of the enactment of this ,act4