ERISA: Court Disregards Three Decades of IRS Letter Rulings – “Church Plan” Exemption Applies Only if Plan Established by “Church”


You already know that a “church plan” is exempt from ERISA, unless the Plan specifically elects to be governed by ERISA under Internal Revenue Code Section 410(d).

But what does it take to become a “church plan”?

Does ERISA require that the Plan be established by a CHURCH before the “church plan” exemption applies? YES.

Here’s the case of Rollins v. Dignity Health, et al., __ F.Supp. 2d __, 2013 WL 6512682 (N.D. Cal. December 12, 2013)(Court gives no deference to “three decades” of IRS private letter rulings and concludes only a church can establish a church plan).

FACTS:  Plaintiff Rollins was employed with Dignity Health, a non-profit healthcare provider associated with the Roman Catholic Church. Rollins sought pension benefits, and contended Dignity Health had failed to comply with ERISA administrative requirements.

Dignity Health contended the Plan was not governed by ERISA because it is a “church plan,” explicitly exempt from ERISA.

ISSUE: Whether ERISA requires a church plan to have been established by a church?

HELD: Dignity’s Pension Plan was governed by ERISA. Dignity did not qualify for the “Church Plan” exemption because it is not a “Church.”


  1. “Text (of the ERISA statute) and the history confirm that a church plan must still be established by a church.  Because Dignity is not a church or an association of churches, and does not argue that it is, the Court concludes that Dignity does not have the statutory authority to establish its own church plan….”  Op. at 12.
  2. “[T]he Court declines to defer to the IRS’s (‘three decades’ of) interpretation of the ERISA statute here.”  Op. at 5.
  3. “The IRS’s private letter rulings apply only to the persons or entities who request them and are not entitled to judicial deference.”  Op. at 5.
  4. “[W]e must presume that Congress acted intentionally in using the words ‘establish and maintain’…as something only a church can do.”  Op. at 8.
  5. “The Court acknowledges that the position it takes here runs contrary to several cases outside this circuit….”  Op. at 9

KEY TAKE AWAY:  Watch out for this case in ERISA pension litigation.  The decision may also play an important role in Long Term Disability litigation, as it supports a substantial narrowing of the Church Plan exemption.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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