If your organization is not a “steeple” church, it is important to determine whether it is a non-qualified church-controlled organization or a qualified church-controlled organization. The requirements under the final regulations are more extensive for non-QCCOs. The term “Non-Qualified Church-Controlled Organization” means an organization described in Code section 3121(w)(B) and Treasury regulations thereunder.
QCCO generally refers to a church-controlled 501(c)(3) tax-exempt organization that:
- Does not generally offer goods, services, or facilities for sale to the general public; or
- Receives less than 25 percent of its financial support from government grants or receipts from goods and services in related activities or business.
Examples of QCCOs are Church of the Brethren Annual Conference, Brethren agencies and entities, and seminaries. Churches and church-related primary and secondary schools, though not technically QCCOs, have to follow the same rules as QCCOs.
Non-QCCO generally refers to any church-controlled, tax-exempt organization described in Code section 501(c)(3) that:
- Offers goods, services, or facilities for sale, other than on an incidental basis, to the general public, other than goods, services, or facilities that are sold at a nominal charge that is substantially less than the cost of providing such goods, services, or facilities; or
- Normally receives more than 25 percent of its support from either (a) governmental sources or (b) receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in activities which are not unrelated trades or businesses, or both.
Examples of non-QCCOs are
church-affiliated hospitals, universities, children’s homes, and retirement
Non-QCCOs, like QCCOs and churches, are eligible to participate in church plans. However, non-QCCOs must comply with the nondiscrimination testing, universal availability, and certain other requirements under the final regulations that are not applicable to churches and QCCOs.
This information should not
be considered tax or legal advice. Brethren Benefit Trust Inc. stands ready to
assist your organization as you work with your legal and tax advisers by
providing resource information that you and your adviser may find beneficial.
Source: Anderson, Janet M.; Levy, Donald R.; and Seymon-Hirsch, Barbara N. 403(b) Answer Book, Seventh Edition. Aspen Publishers, 2008.