What actually is a 410(d) election? Is it simply an irrevocable written election to be covered by ERISA and to have participation, vesting, funding etc. provisions apply to the specific named plan? Is there any formal requirements as to what all has to be included (a sample)? What does the sponsor do with it once completed?

Probably, the first question should be "Why would you want to have a church plan covered by ERISA?"

Two ways I know of:

1) When the plan document is submitted to the IRS for a D letter, a statement is attached indicating the plan is electing under 410(d) to be covered under ERISA. Keep the statement with the plan document.

2) When the plan first elects to be subject to ERISA, a statement is attached to its first 5500 (it's the first, because no 5500 was required until the election under 410(d) was made). This statement tells the government that they can expect a Form 5500 each year.

Why do this? Well, in order to be eligible for reliance on a determination letter or advisory opinion letter associated with a prototype or volume submitter. The document is therefore probably cheaper. A nonelecting church plan that wants any reliance must submit their plan to the IRS - even if they tried using a prototype or vol sub for their document. Did that make up for the extra annual work needed to file a Form 5500? You tell me.

2 possible reasons to elect ERISA status (all of the merits or disadvantages are debatable):

1. To have ERISA preempt state laws that might otherwise be applicable.

2. If it's a DB pension plan, to have PBGC insurance protection. (Don't laugh; this is a valuable feature that may outweigh all of the associated downsides.)

I also have read, since posting, that the IRS and DOL are discussing this and a Church could inadvertently make the election if file the 5500 or use an ERISA document, where currently there is no inadvertent election. We may hear more about this later this year. Thanks

Fisher: It's interesting that you have heard what you said you heard, because until the IRS revises its 410d regulation, there is no legal basis for the position that a 410d election has been made with respect to a church plan simply because the document contains ERISA-required provisions or refers to ERISA.

Does the IRS need a legal basis for their actions? (e.g. Paul Shultz memo re: 0.5% accrual for 401a26)

J4FKBC: Bad example; IRS can take an unsupported position as long as it is not a detriment to any taxpayer, because nobody has standing to complain. Taking the position that a plan is subject to ERISA purports to effect the rights of participants and beneficiaries, and also to preempt the application of state law. So, the IRS position is meaningless when there is no basis for same.