Jump to Content

Assisted Religious Organization With Conversion of Nonqualified Defined Benefit Plan to Qualified Plan

Hodgson Russ attorneys represented a large religious organization with respect to a previously nonqualified defined benefit retirement obligation it had. The organization had set aside significant assets to fund this liability. However, under the existing structure, these assets remained subject to risk of creditor attack should an unforeseen, unfavorable financial liability have occurred.

Hodgson Russ partner Richard W. Kasier presented several different methods to safeguard and protect these funds so that they would remain available for the benefit of intended beneficiaries while still preserving the organization’s ability to have a significant degree of flexibility in the provision of retirement benefits. The final approach was the successful conversion of the nonqualified arrangement into a qualified defined benefit plan. This approach provided increased creditor protection for the assets while maintaining a high degree of flexibility in the administration of benefits because the arrangement could be treated as a non-electing church plan exempt from many requirements under ERISA and the Internal Revenue Code.