Lenders occasionally make loans to borrowers that sponsor “church plans.” “Church plans” are generally exempt from ERISA, including ERISA’s funding and lien rules. Often “church plans” are sponsored by non-profit hospitals, universities and other entities that have a religious affiliation. The IRS has generally ruled that the plans of such entities are exempt “church plans.” Plaintiffs in a recent California Federal district court decision and in lawsuits in process against large health care systems in four other jurisdictions have argued that the ERISA exemption for “church plans” should be limited to plans of actual churches. Depending on how these cases develop, lenders may want to analyze “church plans” in the same way that ERISA-covered pension plans are analyzed.

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