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Liability for Retirement Fund Losses

Protect your retirement fund and its governing board from liability for losses.

A federal court in Minnesota ruled that a national denomination was not liable for losses suffered by beneficiaries of a denominational retirement plan because it did not exercise sufficient control over the fund to be liable for the actions of the fund's managing board.

Four retired ministers (the "plaintiffs") sued their denomination (the "national church") to recover losses they incurred in a denominational pension fund. The pension fund is a defined contribution retirement plan under section 403(b) of the tax code. The plan is a "church plan" that is exempt from ERISA, absent an election to the contrary. Under the plan, defined contributions are made on behalf of participating members into their individual accounts. Plan participants have options for directing their plan accumulations. Before retirement, the accounts are considered "active," and plan participants can direct their accumulations ...

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Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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Posted:
  • July 1, 2012