Church Affiliated Retirement Plans

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Supreme Court Says Retirement Plans From Church Affiliated Organizations Not Covered by Employee Retirement Security Act

The United States Supreme Court recently considered the issue of whether or not federal ERISA law applies to retirement plans sponsored by church-affiliated non-profit organizations that run hospitals and health care facilities.  In a June 2017 ruling it held that the ERISA rules do not apply to such plans.  See Advocate Health Care Network v. Stapleton,

The Employee Retirement Income Security Act of 1974, commonly referred to as ERISA, obligates private companies offering retirement pension plans to employees to adhere to a number of rules and restrictions.  Due to a number of other federal laws and prior Supreme Court cases, plans that are administered under the ERISA rules have a high degree of protection from creditors of participants in the plan.  In contrast, plans that are not governed by the ERISA rules are more vulnerable to creditors.  So the question of whether or not a particular plan is an ERISA plan is crucial from an asset protection point of view.

The legal question addressed in the Advocate Health Care Network case was pretty narrow.  If the plan offered by the plaintiffs to its employees was a “[C]hurch plan” it would be exempt from the ERISA rules.  As referenced in the ERISA statute, such a plan would “…include…a plan maintained by an organization…the principal purpose…of which is the administration or funding of [such] plan…for the employees of a church…, if such organization is controlled by or associated with a church.”  Although these plans were not created by a church, the Supreme Court nonetheless decided that the nonprofits sponsoring the plan were the type of “principal-purpose organizations” contemplated by the ERISA statute.  Therefore, the Court decided these plans will be exempt from ERISA.

It is worth noting that this ruling is not limited to small employers.  Advocate Health Care Network owns 12 hospitals and 250 health care facilities so it is by no means a small employer.  In a concurring opinion Justice Sotomayor expressed her own personal opinion that the Court’s majority opinion was a correct reading of the statute but nonetheless did not necessarily reflect good public policy.  It seems somewhat arbitrary for the retirement plan of one gigantic non profit to be subject to ERISA while the retirement plan of another is not, simply because the latter is loosely affiliated with a church.

In the planning work we do for clients, we certainly appreciate when retirement plans happen to provide asset protection benefits to our clients.  But we don’t necessarily rely on those protections as being adequate to address all of the issues our clients are likely to fact.  There are many other planning strategies we utilize that are more comprehensive and provide better protections against a variety of problems our clients are likely to face.

If you have any questions about the issues presented above or care to discuss any other planning issues, please call us at 860-769-6938, visit our website at or email us at



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