It is important to determine whether your organization is a non-qualified church-controlled organization (“non-QCCO”) or a qualified church-controlled organization (“QCCO”) because the requirements under the final regulations are more extensive for non-QCCOs.
Non-QCCO generally refers to any church-controlled, tax-exempt organization described in Code section 501(c)(3), that:
- offers goods, services, or facilities for sale, other than on an incidental basis, to the general public, other than goods, services, or facilities which are sold at a nominal charge which is substantially less than the cost of providing such goods, services, or facilities; and
- normally receives more than 25% of its support from either (a) governmental sources or (b) receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in activities which are not unrelated trades or businesses, or both.
Examples of non-QCCOs are church-affiliated hospitals, universities, children’s homes, and retirement housing facilities.
QCCO generally refers to a church-controlled 501(c)(3) tax-exempt organization that:
- does not generally offer goods, services, or facilities for sale to the general public; or
- receives less than 25% of its financial support from government grants or receipts from goods and services in related activities or business.
Examples of QCCOs are General Assembly agencies and entities, and seminaries. Churches, and church-related primary and secondary schools, though not technically QCCOs, have to follow the same rules as QCCOs.
Non-QCCOs, like QCCOs and churches, are qualified to participate in church plans. However, non-QCCOs must comply with the universal availability requirement and code sections 401(a)(4), 401(m), and 410(b). These requirements are not applicable to churches and QCCOs.