Ask the Experts October 23, 2018

(b)lines Ask the Experts – Auto-Enrollment in Church Plans Where States Require Consent

“We are a church 403(b) plan sponsor, whose headquarters is in a state that requires consent of the employee prior to making any deductions from salary. Could we still add an auto-enrollment provision to our plan?”

Reported by

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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Yes. The Protecting Americans from Tax Hikes act of 2015, otherwise known as the PATH Act, specifically allowed church plans to establish automatic contribution arrangements (otherwise known as auto-enrollment), and specifically exempted church plans from any state laws that would restrict such automatic contribution arrangements.

Prior to that time, state laws relating to participant consent to wage deductions would have been problematic for church plans who wish to add an auto-enrollment provision, since church plans that do not elect Employee Retirement Income Security Act (ERISA) coverage are generally subject to state laws relating to retirement plans.

For more details on the PATH Act’s auto-enrollment provisions for churches, please see this PLANSPONSOR article.

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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