Who is eligible?
Organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code or that are public educational organizations. However, Praxis Mutual Funds will only establish a 403(b) plan for churches and qualified church organizations.
What types of contributions can be made to a Praxis 403(b) plan?
Praxis can accept salary reduction contributions (elective deferrals) from employees and employer contributions. Praxis is unable to accept Roth 403(b) contributions.
What is a church?
For 403(b) plan purposes, the term “church” means a church, a convention or association of churches, or an elementary or secondary school which is controlled, operated or principally supported by a church or by a convention or association of churches. Congregations would meet the definition of “church”.
What is a QCCO?
The term “qualified church-controlled organization” means any church-controlled tax-exempt organization described in Internal Revenue Code section 501(c)(3), that receives the majority of its support from donations. Church-controlled organizations that (i) offer goods, services or facilities for sale to the general public, and (2) normally receive more than 25 percent of its support from either (I) governmental sources, or (II) receipts from admissions, sales of merchandise, performance of services or furnishing of facilities, are not considered QCCOs. Examples of organizations that are not QCCOs are retirement communities, hospitals, nursing homes and colleges. If you are a church organization and you are not sure if you meet the definition of a QCCO, please consult your legal counsel.
What forms do we need to complete to establish a Praxis 403(b)?
If you are a church or QCCO that only offers annuity contracts or mutual funds through your 403(b) plan, then complete the 403(b) Employer enrollment application and send to Praxis Mutual Funds.
If you are not a church or QCCO, then you must work with a third party administrator to establish a 403(b) plan, or you may want to consider other plan options, such as a SIMPLE IRA.