Ask the Experts – Controlled Group Rules for Churches

Experts from Groom Law Group and Cammack Retirement Group answer questions concerning 403(b) plans and regulations.

“Are the rules for determining whether churches are part of the same controlled group of employers the same or different as those that apply to other nonprofit entities? If different, what are the rules?”

Stacey Bradford, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:

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Historically, the rules regarding controlled groups for churches were not crystal clear. However, the Protecting Americans from Tax Hikes (PATH) Act amended Code section 414(c) to clarify the application of these rules to churches.

Generally, an organization that is otherwise eligible to participate in a church plan will not be aggregated with another such organization and treated as a single employer for a plan year unless (i) one of the organizations provides (directly or indirectly) at least 80% of the operating funds for the other organization during the preceding taxable year, and (ii) there is a degree of common management or supervision between the organizations such that the organization providing the operating funds is directly involved in the day-to-day operations of the other organization.

However, there are two exceptions to the general rule:

(a)    Non-qualified church controlled organizations (non-QCCOs or NQCCOs) are aggregated with other NQCCOs, or with organizations not exempt from tax under Code section 501, only if at least 80% of the directors or trustees of such other organization are either representatives of, or directly or indirectly controlled by, such NQCCO. (A NQCCO is generally an organization that (1) offers goods, services or facilities for sale to the general public and (2) normally receives more than 25% of its support from governmental sources or from such sales. Examples include church-related hospitals, colleges, universities and nursing homes.)

(b)    A church or convention or association of churches, or an organization designated by such church or convention or association of churches, may elect to treat such organizations as a single employer for a plan year. Once made, such election shall apply to all succeeding plan years unless properly revoked. In addition, in the case of a church plan, an employer may elect to treat churches (i.e., churches and QCCOs) separately from entities that are not churches (e.g., NQCCOs), without regard to whether such entities maintain separate church plans. Keep in mind that the plaintiffs’ bar has been challenging many of the definitions in this area of church plans for some time.

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

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TRIVIAL PURSUITS: Things You May Not Know About Daddy Longlegs

First of all, they are not spiders.

Whether you call them “granddaddy longlegs,” “daddy longlegs,” “cellar spiders” or “harvestmen,” the creatures with a tiny body and eight very long legs are not spiders. However, it is an arachnid—just as scorpions are.

A common myth is that daddy longlegs are the most venomous creatures, but cannot bite humans because of their short fangs. The common daddy longlegs that we mostly see does not have venom.

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There is a less common daddy longlegs spider, but because they rarely bite, scientists have not studied the myth. However, Nature reports that the team of the Discovery Channel show “Mythbusters” got an expert to milk the venom and compare its effect on mice (a standard test for venoms) to the effect of the same amount of black widow venom. Black widows were far more deadly. In addition, Adam Savage allowed himself to be bitten by a daddy longlegs—not only was it able to bite him, but he barely felt the bite and suffered no ill after effects.

Back to the daddy longlegs arachnids, they have a tendency to shed their legs. They will voluntarily shed legs to get away from predators, but sadly, a new appendage does not grow back if it is already full grown. The reason this is sad is their legs are also nerve centers, according to ThoughtCo. Through its legs, the daddy longlegs may sense vibrations, smells and tastes, so pulling the legs off may be taking away a sense or senses.
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