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Churches and SIMPLE IRAs

Q: A church with one pastor established an employee deferral 403(b) plan via a mutual fund. There are no employer contributions, nor is there a plan document.

Could the church establish a SIMPLE IRA as more pastors are added as long as there are no 403(b) contributions in the same plan year?

A: While that would be permissible, the 403(b) plan simply could be used to add other pastors, and it is a fact that 403(b) plans for churches generally are superior to a SIMPLE IRA — or most other types of plans, for that matter.

Incidentally, there must be a plan document — churches are required to have one unless they are sponsoring a 403(b) retirement income account.