April 25, 2000 – The Commodity Futures Trading Commission (CFTC) publishes a Final Rule on Commodity Pool Operators; Exclusion for Certain Otherwise Regulated Persons From the Definition of the Term “Commodity Pool Operator”. It adds ERISA section 3(33) church plans to the types of employee benefit plans that CFTC Rule 4.5(a)(4) says will not be construed to be commodity pools.
The CFTC says factors that influenced this decision were Congress exempting Church Plans from coverage under Title I and IV of ERISA “to avoid excess Government entanglement with religion in violation of the First Amendment to the Constitution”, and Congress deciding, in the National Securities Markets Improvement Act of 1996, that Church Plans are not investment companies under the Investment Company Act of 1940 and therefore they are not subject to registration as such.
Because the CFTC rarely interacts with ERISA (the IRS, DOL, SEC and PBGC do most of the heavy lifting when it comes to regulating plans), and because Commodity Pool Operator does not immediately come to mind when someone mentions church plans, this is one of the more unusual ERISA-related regulations. A little background –
The CFTC was created in 1974 with the enactment of the Commodity Futures Trading Commission Act. It was given the task of regulating commodity futures and option markets in the United States. In 1974, most futures trading happened in the agricultural sector.
A Commodity Pool Operator is an individual or organization that operates a commodity pool and solicits funds for that commodity pool.
A commodity pool is an enterprise in which funds contributed by a number of persons are combined for the purposes of trading futures contracts, options on futures, or retail of-exchange forex contracts, or to invest in another commodity pool.
If you have any examples of church plans operating commodity pools, please share. I’ve never been able to quite picture how church plans operate commodity pools. When I think of church plans, I think of plans designed to provide pension or retirement benefits to employees of the church, like the pastor and his wife.