In Kaplan v. Saint Peter’s Healthcare System, No. 15-1172 (3rd Cir. 2015), the Third Circuit Court of Appeals (the “Court”) reviewed the exemption from ERISA for church plans, found in section 4(b)(2) of ERISA.
The Court noted that, under this exemption, a church plan need not comply with a host of ERISA provisions, including fiduciary obligations and minimum-funding rules. The Court noted, further, that ERISA section 3(33)(A) defines a church plan as one that is “established and maintained . . . for its employees (or their beneficiaries)” by a tax-exempt church. Also, section 3(33)(C)(i) clarifies that a “plan established and maintained” by a church includes a plan maintained by a qualifying agency of a church (for example, a qualifying organization affiliated with the church).
But the question faced by the Court is whether a church agency can, in addition to maintaining an exempt church plan, also establish such a plan? The district court concluded that it cannot. The Court agreed. It said that, per the plain text of ERISA, only a church can establish a plan that qualifies for an exemption under § 4(b)(2). Because no church established St. Peter’s Healthcare System’s retirement plan-the plan in question in the case- the Court held that this plan is ineligible for a church plan exemption.