SIMPLE IRA plan OK for a Church ?

[RJM]

Hi ATXers-

As I recall, many of you are involved with church finances. Due to the new 403b plan rules effective 1/1/09, my church is considering terminating our 403b plan by 12/31/08, and replacing it with a SIMPLE IRA effective 1/1/09. I have never heard of a church with a SIMPLE IRA, but my reading suggests there is nothing precluding this. Does anyone know for sure? Is it OK to have a SIMPLE plan at a church? Thanks for any insight.

[jainen]

>>Is it OK to have a SIMPLE plan at a church?<<

My understanding, which I can't support with any affirmative ruling, is that a tax-exempt employer CAN set up a Simple IRA because it's not a qualified plan. Notice 98-4 at http://www.unclefed.com/ForTaxProfs/irs-dr...998/not98-4.pdf only talks about the 100-employee limit under the topic, "Employers that Can Establish Simple IRA Plans."

[RJM]

Thanks for the comments jainen... Since posting this I was able to locate a Richard Hammar church finance reference book, and he is of the opinion churches can do this, although I have never heard of it actually being done. A church blog I found said some other churches are considering switching to SIMPLE due to the new 403b rules, for the same reasons my church is considering it. As long as we terminate our 403b plan by 12/31/08 and give a 60-day SIMPLE signup notification, it will be OK for 2009. We voted to make the change yesterday.