The first quarter of the year is often a time of transition, launching new initiatives and recognizing work completed in the previous year. For Church Alliance member organizations and representatives, passage of the 2020 Fiscal Year Spending Package on December 20, 2019 wrapped up years of advocacy in support of benefits-related legislation that has become law.
Working with multiple denominational benefit organizations through the Church Alliance and across the aisles in both houses of Congress, legislation has been enacted that:
- Preserves the ability of all church-affiliated organizations to participate in church-sponsored 403(b)(9) retirement plans
- Repeals the 40% “Cadillac Tax” on health care coverage
- Repeals the “Parking Lot Tax” on churches and other tax-exempt organizations
403(b)(9) Retirement Plans Preserved
Over six years ago, I joined with the Church Alliance to advocate for the more than one million workers who serve in churches and church-affiliated social ministries. An IRS decision meant these workers were in danger of losing the advantages afforded to them through church-sponsored 403(b)(9) retirement plans.
The bill we introduced sought to preserve 403(b)(9) access for church-affiliated organizations, and it became part of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which was enacted with the 2020 Spending Package. As a result, church-related nursing homes, daycare centers, summer camps, colleges, universities, hospitals, and social service organizations continue to be eligible to participate in these plans.
I firmly believe that preserving access to this valuable retirement savings tool was the right thing to do. Employees of congregations, social ministry organizations, seminaries, and universities dedicate their careers to a life of service, so it is paramount that they have the ability to save for retirement.
No Cadillac Tax on Health Care Coverage
A 40% “Cadillac Tax” was to have been imposed on health care coverage that exceeded certain government-imposed thresholds. While the name implied it would only apply to extravagant coverage, in reality it would have affected modest plans covering middle-class church workers and their families. In addition, the tax would have disproportionately affected the health care coverage of women, early retirees, those in rural communities, and individuals living with a disability or serious illness.
The ability to serve depends on personal well-being, which is why affordable health care coverage is so important. With the repeal of the “Cadillac Tax” there is no need to worry about or plan for this onerous tax.
Repeal of the Parking Lot Tax
On January 1, 2018, a tax provision went into effect that subjected tax-exempt organizations, including churches, to tax liability and reporting requirements on amounts spent to provide parking, public transit passes, and other transportation benefits to employees.
Portico and the Church Alliance recognize that providing parking and transportation benefits are necessary to fully address the needs of those you serve. Through our work, tax-exempt organizations, including churches, no longer will be taxed on the costs of parking lots and other transportation-related benefits provided to or used by their employees. In addition, those same organizations are now able to request tax refunds of any prior tax paid under the repealed provision.
So You Can Embrace Every Day
Political advocacy is a vital part of our service. We will continue to act as a voice for the ELCA community in the political arena, advocating on your behalf to enact benefits-related legislation that positively impacts your ability to serve your mission.