Five healthcare-system retirement and welfare plans qualify as church plans

Plain-English summary

A tax-exempt healthcare system affiliated with a church asked whether five defined-benefit, defined-contribution, Section 403(b), welfare, and acquired retirement plans qualify as church plans. The system was created to carry out the church's religious, healthcare, and charitable mission, was listed in the church's official directory, and remained subject to church doctrine and oversight through its governing entities. Each plan was administered by a committee of system officers and religious-organization members whose principal function was maintaining that plan for participants and beneficiaries. The IRS found that the healthcare system is controlled by or associated with the church and that its employees are deemed church employees. It also found that each plan committee is controlled by or associated with the church. All five plans therefore qualify as church plans under IRC § 414(e).

Ruling snapshot

• Question: Do the healthcare system's five retirement and welfare benefit plans qualify as church plans?
• Outcome: Approved for all five plans
• Key authorities: IRC § 414(e); Treas. Reg. § 1.414(e)-1; Advocate Health Care Network v. Stapleton; Rev. Proc. 2011-44

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202548003 Third Party Communication: None
Release Date: 11/28/2025 Date of Communication: Not Applicable
Index Number: 414.08-00
Person To Contact:
----------------------------- ----------------, ID No. -----------------
-------------------------------------------- Telephone Number:
------------------------------------------------------------ --------------------
---------------- Refer Reply To:
----------------------- CC:EEE:EB:QP1
PLR-122040-24
Date:
July 31, 2025

Legend

Entity A = ---------------------------------------------------------------------
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Entity B = ---------------------------------------------------------------------
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Entity C = -------------------------------------
Entity D = ----------------------------------------------
Entity E = --------------------------------------------------------------------
Entity F = ------------------------------------------
Entity G = ---------------------------------------------------------------
Entity H = --------------------------------------------
Year 1 = -------
Year 2 = -------
Year 3 = -------
State X = -------------
State Y = --------------
Congregation = -------------------------------------------------
Liturgy = -------------------------
Church = --------------------------------
Amount 1 = ---------
Amount 2 = -
Amount 3 = -----------
Amount 4 = ---
Amount 5 = ---
Religious Leader = --------------------------
Church Department = ---------------------------------------------

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Public Figure = ------------------------------------
Executive = ---------------------------------------------------------------------
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Committee A = ------------------------------------------------------------------

Committee B = --------------------------------------------

Committee C = --------------------------------------------

Committee D = ---------------------------------------------------------------------
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Committee E = ---------------------------------------------------------------------
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Plan 1 = ---------------------------------------------------------------------
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Plan 2 = ---------------------------------------------------------------------
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Plan 3 = ---------------------------------------------------------------------
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Plan 4 = ---------------------------------------------------------------------
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Plan 5 = ---------------------------------------------------------------------
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Old Plan 1 = ---------------------------------------------------------------------
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Old Plan 2 = ---------------------------------------------------------------------
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Old Plan 3 = ---------------------------------------------------------------------
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Date 1 = ---------------------------
Date 2 = ---------------------------
Date 3 = --------------------------
Date 4 = ----------------
Date 5 = --------------------------
Date 6 = ---------------------------
Date 7 = ----------------------
Date 8 = --------------------------
Date 9 = ----------------------
Date 10 = ----------------------
Date 11 = ----------------------
Date 12 = ----------------
Date 13 = ----------------------
Date 14 = -----------------------
Date 15 = ---------------------
Date 16 = ---------------------

PLR-122040-24 3

Dear --------------------:

This letter responds to the letter dated November 20, 2024, as supplemented by
correspondence dated June 9, 2025, submitted on your behalf by your authorized
representative, regarding the status of Plan 1, Plan 2, Plan 3, Plan 4, and Plan 5, each
as a church plan within the meaning of section 414(e) of the Internal Revenue Code
(Code).

The following facts and representations have been submitted under penalty of perjury in
in support of the ruling requested.

Entity A is a tax-exempt organization described in section 501(c)(3). Entity A offers
healthcare and related services throughout State X and State Y. Entity A was formed in
Year 1 to perform, promote, and support religious, health, and charitable activities of
Congregation, in accordance with Liturgy. Entity A is listed in the official directory of
Church. Entity A has over Amount 1 employees and serves nearly half of the citizens of
State X. Entity B was the parent of Entity A until Date 1, when Entity C became the
parent of Entity A.

Entity A is governed by its board of trustees, its parent (Entity B prior to Date 1, and
Entity C beginning on Date 1) and Church. Entity A’s bylaws provide that its board of
trustees must be between three and 18 people, as determined by its parent (five of
which are currently from Entity C). The CEO of Entity A is appointed by its parent.
Additionally, 75 percent of Entity A’s board must be members of Church. Entity A’s
board of trustees have limited powers including approving the strategic business plan of
Entity A or any of its direct subsidiaries, appointing or removing an officer of Entity A,
except for the President, or any of its direct subsidiaries, and approval of debt
obligations for less than Amount 2 years or an amount less than Amount 3 dollars. In
addition, Entity A’s board of trustees must exercise its powers in accordance with
Liturgy. All actions of Entity A’s officers, doctors, and board members must adhere to
Liturgy.

Entity B was previously a religious congregation of Church. Entity B is part of an
international group that conducts health and education programs in Amount 4 countries
under the mandate of Church. Members of Entity B agree to further the purposes of
Church and fulfill the mission of Entity B. Entity B’s mission statement states that it must
carry the vision and mission of Church, which includes charitable works such as care of
the poor, ill, elderly, and handicapped. Entity B created Entity A in Year 1 and was the
parent of Entity A until Date 1 when Entity A was transferred to Entity C after approval
from Religious Leader.

Entity C is comprised of five members who were initially appointed by Entity B. Entity
C’s current board consists of two members of Entity B, one member of another religious
order, Public Figure, and a former Executive of Entity A. Each member of the board has

PLR-122040-24 4

to be a member of Church and is required to attend a formation process to prepare
members to carry out the health ministry of Church. Entity C’s members serve as voting
members of the board of Entity A, and exercise certain powers over Entity A including
the power to 1) amend, modify, or repeal the articles of incorporation and bylaws of
Entity A, 2) appoint individuals to Entity A’s board, 3) appoint or terminate the CEO and
President of Entity A, and 4) authorize any debt obligation with a term greater than
Amount 2 years or Amount 3 dollars. Entity C and each of its members must adhere to
Liturgy. Certain powers of Entity C, including leases in excess of Amount 5 years must
be approved by Religious Leader. Entity C must send a report detailing the operations
of Entity A to Religious Leader. Additionally, the members of Entity C must meet
annually with Church Department to review the annual report and status of Entity A
operations.

Entity A maintains a number of retirement and welfare plans for its employees and its
subsidiaries’ employees. Plan 1 is a retirement plan that was created when three
defined benefits plans (Old Plan 1, Old Plan 2, and Old Plan 3, together the Old Plans)
sponsored by Entity A’s subsidiaries, Entity D, Entity E, and Entity F, were merged
together in Year 2. Prior to the merger, Old Plan 1 received a favorable determination
letter on Date 2, Old Plan 2 also received a favorable determination letter on Date 2,
and Old Plan 3 received a favorable determination letter on Date 3. On Date 4, the Old
Plans, all of which were frozen, were merged together, renamed Plan 1, and
sponsorship was moved to Entity A.

The board of Entity A approved a charter that appointed Committee A to administer
Plan 1 on Date 4. Committee A consists of five members, which consists of four Entity A
officers and one member of Entity B. Committee A has as its primary responsibility the
maintenance and administration of Plan 1 for the exclusive benefit of participants and
beneficiaries of Plan 1. Committee A serves at the pleasure of Entity A’s board and is
the plan administrator of Plan 1. No election under section 410(b) was made with
respect to Plan 1 or the Old Plans, and none of the eligible participants are employed in
connection with a for-profit entity of one or more unrelated trades or businesses of
Entity A within the meaning of section 513.

Effective on Date 5, Entity A restructured its retirement program. Instead of having its
employees participate in three different defined benefit plans (the Old Plans), it froze
those plans and adopted one new defined contribution plan which was available to all
members of its controlled group. The three existing defined benefit plans were not
available to new hires, and new hires were eligible to participate in the new defined
contribution plan, Plan 2. Plan 2 received multiple determination letters including a letter
issued on Date 6. Effective as of Date 7, all employees of Entity A’s controlled group
became Entity A employees.

Plan 2 was frozen as of Date 8 when Entity A again restructured its retirement program.
Effective as of Date 9, Entity G, a not-for-profit entity under section 501(c)(3) (that is an
education institution affiliated with Church), became a participating employer in Plan 2.

PLR-122040-24 5

Entity G is a wholly owned subsidiary of Entity D, and Entity D is a wholly owned
subsidiary of Entity A.

Plan 2 is operated under the authority of Entity A, whose board approved a charter
which appoints the members of Committee B. The current charter designates five
individuals as Committee B members, consisting of four Entity A officers and one
member of Entity B. Committee B has as its primary responsibility the maintenance and
administration of Plan 2 for the exclusive benefit of participants and beneficiaries
(subject to the specific terms of Plan 2) and the oversight of Plan 2’s investments.
Committee B serves at the pleasure of the Entity A’s board of trustees. Committee B is
identified as the plan administrator in Plan 2’s plan document.

An election under section 410(d) has not been made with respect to Plan 2, and none of
the eligible participants are employed in connection with a for-profit entity of one or
more unrelated trades or businesses of Entity A within the meaning of section 513.

As of Date 10, Entity A adopted Plan 3, a retirement plan under section 403(b) which
was limited to employee pretax salary deferral contributions. Effective as of Date 11,
Entity A amended and expanded Plan 3 so that, in addition to receiving salary deferral
contributions, it receives an employer matching contribution and an employer profit
sharing contribution. Plan 3 currently serves as the primary retirement vehicle for the
Amount 1 employees of Entity A. Effective as of Date 9, Entity G, a not-for-profit entity
under IRC section 501(c)(3), became a participating employer in Plan 3. Entity G is a
wholly owned subsidiary of Entity D, and Entity D is a wholly owned subsidiary of Entity
A.

Plan 3 is operated under the authority of Entity A, whose board approved a charter that
appoints the members of Committee C. The current charter designates five individuals
as Committee C members consisting of four Entity A officers and one member of Entity
B. Committee C has as its primary responsibility the maintenance and administration of
Plan 3 for the exclusive benefit of participants and beneficiaries, subject to the specific
terms of the Plan and the oversight of the Plan's investments. Committee C serves at
the pleasure of the Entity A’s board of Trustees. Committee C is the plan administrator
and is identified as such in Plan 3’s plan document.

An election under Section 410(d) has not been made with respect to Plan 3, and none
of the eligible participants are employed in connection with a for-profit entity of one or
more unrelated trades or businesses of Entity A within the meaning of section 513.

Effective as of Date 11, Entity A adopted a welfare benefit plan called Plan 4 to contain
its self-insured health plan, cafeteria plan, dental plan, vision plan, long term disability,
basic life, accidental death & dismemberment and employee assistance program
offered to its employees. Effective as of Date 9, Entity G, a not-for-profit entity that is
tax-exempt under section 501(c)(3), became a participating employer in Plan 3. Entity G

PLR-122040-24 6

is a wholly owned subsidiary of Entity D, and Entity D is a wholly owned subsidiary of
Entity A.

Plan 4 is operated under the authority of Entity A, whose board approved a charter
which appoints the members of Committee D. The current charter designates six
individuals as Committee D members consisting of five Entity A officers and one
member of Entity B. Committee D has as its primary responsibility the maintenance and
administration of Plan 4 for the exclusive benefit of participants and beneficiaries,
subject to the specific terms of the Plan, and the oversight of Plan 4's investments.
Committee D serves at the pleasure of Entity A’s board of Trustees. Committee D is the
plan administrator of Plan 4, as identified as such in the Plan 4’s plan document.

An election under Section 410(d) has not been made with respect to Plan 4. None of the
eligible participants in Plan 4 are employed in connection with a for-profit entity of one or
more unrelated trades or businesses of Entity A within the meaning of section 513(g).

Effective as Date 12, Entity A acquired Entity H. Entity H is a healthcare provider
affiliated with Church. Entity H sponsored Plan 5, a defined benefit plan that was initially
effective as of Date 13. Plan 5 was determined to be a valid qualified plan by numerous
IRS determination letters, including a letter dated Date 14, and was determined to be a
church plan in a private letter ruling issued to Entity H on Date 15. The Date 15 private
letter ruling explained that the Plan was operated under the authority of the plan
sponsor and was administered by Committee E. It further stated that Committee E
shared common religious bonds and convictions with the Church. When Entity A
acquired Entity H, Entity A became responsible for Plan 5. Plan 5 is operated under the
authority of Entity A, whose board approved a charter which appoints the members of
Committee E. The current charter designates five individuals as Committee E members,
consisting of four Entity A officers and one member of Entity B. Committee E has as its
primary responsibility the maintenance and administration of Plan 5 for the exclusive
benefit of participants and beneficiaries, subject to the specific terms of Plan 5.
Committee E serves at the pleasure of Entity A’s board of trustees. Committee E is the
plan administrator, as identified as such in the Plan 5’s plan document. Effective as of
Date 16, Entity H was dissolved and Entity A became the plan sponsor of Plan 5.

An election under Section 410(d) has not been made with respect to Plan 5. None of the
eligible participants are employed in connection with a for-profit entity of one or more
unrelated trades or businesses of Entity A within the meaning of section 513.

Entity A was created by Entity B, which is a religious congregation of Church, founded
under the auspices of, and for the purpose of, furthering the teachings and tenets of the
Church. Entity B fulfills one of its missions by supporting healthcare enterprises
undertaken by Church. Entity B, through Entity A, operated various hospitals identified
above and related entities, in order to fulfill that purpose. In Year 3, Religious Leader
transferred the ownership of Entity A to a newly created entity, Entity C, with the
intention of continuing ministries started by Entity B.

PLR-122040-24 7

Entity A is requesting a private letter ruling that Plan 1, Plan 2, Plan 3, Plan 4, and Plan
5, are each a church plan under section 414(e).

Section 414(e)(1) generally defines a church plan as a plan established and maintained
for its employees (or their beneficiaries) by a church or a convention or association of
churches which is exempt from taxation under section 501.

Section 1.414(e)-1(a) states that the term “church plan” means a plan established and
at all times maintained for its employees by a church or by a convention or association
of churches which is exempt from tax under section 501(a).

Section 414(e)(2) provides, in part, that the term “church plan” does not include a plan
that is established and maintained primarily for the benefit of employees (or their
beneficiaries) of such church or convention or association of churches who are
employed in connection with one or more unrelated trades or businesses (within the
meaning of section 513); or if less than substantially all of the individuals included in the
plan are individuals described in section 414(e)(1) or section 414(e)(3)(B) (or their
beneficiaries).

Section 414(e)(3)(A) provides that a plan established and maintained for its employees
(or their beneficiaries) by a church or a convention or association of churches includes a
plan maintained by an organization, whether a civil law corporation or otherwise, the
principal purpose or function of which is the administration or funding of a plan or
program for the provision of retirement benefits or welfare benefits, or both, for the
employees of a church or a convention or association of churches, if such organization
is controlled by or associated with a church or a convention or association of churches.
See Advocate Health Care Network v. Stapleton, 137 S. Ct. 1652 (2017), holding that a
plan that is maintained by an organization described in section 414(e)(3)(A) may be a
church plan under section 414(e) even if it was not established by a church or a
convention or association of churches.

Section 414(e)(3)(B) generally defines “employee” of a church or a convention or
association of churches to include a duly ordained, commissioned, or licensed minister
of a church in the exercise of his or her ministry, regardless of the source of his or her
compensation, and an employee of an organization, whether a civil law corporation or
otherwise, which is exempt from tax under section 501, and which is controlled by or
associated with a church or a convention or association of churches.

Section 414(e)(3)(C) provides that a church or a convention or association of churches
which is exempt from tax under section 501 shall be deemed the employer of any
individual included as an employee under subparagraph (B).

Section 414(e)(3)(D) provides that an organization, whether a civil law corporation or
otherwise, is associated with a church or a convention or association of churches if it

PLR-122040-24 8

shares common religious bonds and convictions with that church or convention or
association of churches.

Revenue Procedure 2011-44, 2011-39 IRB 446, supplements the procedures for
requesting a letter ruling under section 414(e) relating to church plans. The revenue
procedure: (1) requires that plan participants and other interested persons receive a
notice in connection with a letter ruling request under section 414(e) for a qualified plan;
(2) requires that a copy of the notice be submitted to the Internal Revenue Service (IRS)
as part of the ruling request; and (3) provides procedures for the IRS to receive and
consider comments relating to the ruling request from interested persons.

In order for an organization that is not itself a church or convention or association of
churches to have a qualified church plan, it must establish that its employees are
employees or deemed employees of a church or convention or association of churches
under section 414(e)(3)(B) by virtue of the organization's control by or association with
the church or convention or association of churches. Employees of any organization
maintaining a plan are considered to be church employees if the organization: (1) is
exempt from tax under section 501; and (2) is controlled by or associated with a church
or convention or association of churches. In addition, in order to be a church plan, the
administration or funding (or both) of the plan must be by an organization described in
section 414(e)(3)(A). To be described in section 414(e)(3)(A), an organization must
have as its principal purpose the administration or funding of the plan and must also be
controlled by or associated with a church or convention or association of churches.

Entity A was formed to perform, promote, and support religious, health, and charitable
activities of Congregation, in accordance with Liturgy. Entity A is listed in the official
directory of Church. Entity A has over Amount 1 employees and provides healthcare
services to nearly half of the citizens of State X.

Entity A is a non-profit corporation that is exempt from federal income tax under section
501(c)(3). Entity A’s primary purpose is to manage an integrated health system to
coordinate and support its system wide mission of reaching those people who are most
in need of health care in each of the communities served by its hospitals.

Entity A is governed by a board of trustees, 75 percent of which must belong to Church.
All members of the board of its parent company (Entity C) sit on the Entity A’s board.
The board members of Entity C appoint the other Entity A board members, appoint the
Entity A CEO and Entity A president, and exercise reserve powers over all major
decisions affecting Entity A. Each year, Entity C provides a written detailed report to
Church of Entity A's operations, and then attends an in-person meeting with the Church
Department to further answer and address questions concerning Entity A operations.
Entity C must obtain the consent of Religious Leader on transformative decisions. Entity
A, its doctors, its officers, and its parent entity (Entity C) adhere to Liturgy. Entity A and
all related entities are listed the official directory of Church.

PLR-122040-24 9

You represent that none of the eligible participants in Plan 1, Plan 2, Plan 3, Plan 4, or
Plan 5 are employed in connection with a for-profit entity or one or more unrelated
trades or businesses of Entity A within the meaning of section 513.

Based on these facts, we conclude that Entity A is controlled by or associated with a
church for purposes of section 414(e). We further conclude that the employees of Entity
A are deemed to be employees of a church or a convention or association of churches
by virtue of being employees of an organization which is exempt from tax under section
501 and which is controlled by or associated with a church or a convention or
association of churches.

Each of the five plans maintained by Entity A is administered by a committee. Each
committee has as its principal purpose or function the administration or funding of the
respective plan within the meaning of section 414(e)(3)(A). The primary responsibility of
each committee is to administer each plan for the exclusive benefit of the participants
and beneficiaries, subject to the specific terms of the plan.

Each committee has been designated the administrator of the plan for which it provides
administration oversight. Each committee meets on a quarterly basis and during those
meetings, reviews plan operations, participant issues, vendors contacts, annual audits
and investment oversight (if applicable) and any other items that are necessary to
ensure each plan is maintained in accordance with the Code or other applicable law.
Each committee is comprised of Entity A officers and Entity B members. All committee
members are appointed by the Entity A board of trustees, via a charter. When the board
of Entity A appoints the members of each committee, it is doing so on behalf of Entity B,
Congregation, and Church, under the general authority delegated to it by Church. Each
committee shares common religious bonds and convictions with Entity A, Entity C (and
formerly Entity B), and Church. Because the committee members are Entity A officers
and Entity B members, they adhere to Liturgy.

We thus conclude that each committee is controlled by or associated with Church.
Accordingly, Plan 1, Plan 2, Plan 3, Plan 4, and Plan 5 are each maintained by an
organization that is controlled by or associated with a church or a convention or
association of churches, the principal purpose or function of which is the administration
of Plan 1, Plan 2, Plan 3, Plan 4, and Plan 5, respectively for the provision of
retirement/welfare benefits for the deemed employees of a church or a convention or
association of churches. Therefore, Plan 1, Plan 2, Plan 3, Plan 4, and Plan 5 are
church plans within the meaning of section 414(e) of the Internal Revenue Code.

Except as expressly provided herein, no opinion is expressed or implied concerning the
tax consequences of any aspect of any transaction or item discussed or referenced in
this letter.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that
it may not be used or cited as precedent.

PLR-122040-24 10

The rulings contained in this letter are based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party, as specified in Rev. Proc. 2025-1, 2025-1 I.R.B. 1,
§ 7.01(16)(b). This office has not verified any of the material submitted in support of the
request for a ruling, and such material is subject to verification on examination. The
Associate office will revoke or modify a letter ruling and apply the revocation
retroactively if there has been a misstatement or omission of controlling facts; the facts
at the time of the transaction are materially different from the controlling facts on which
the ruling was based; or, in the case of a transaction involving a continuing action or
series of actions, the controlling facts change during the course of the transaction. See
Rev. Proc. 2025-1, § 11.05.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representative.

                                       Sincerely,



                                       Jeremy Lamb
                                       Senior Counsel, Qualified Plans Branch 2
                                       Office of Associate Chief Counsel
                                       (Employee Benefits, Exempt Organizations,
                                       and Employment Taxes)

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