QCCO vs. NQCCO: Is your organization’s status current and correct?

Ministry happens in countless ways — like preaching in a church, leading a campus Bible study or gathering around a kitchen table — to name just a few. God’s work knows no boundaries.

But when it comes to financial stewardship for ministries, boundaries do exist. The IRS requires ministry organizations to be classified, and that classification isn’t just a formality; it shapes how your retirement plan operates.

Your organization could fall into one of these two classifications: a Qualified Church-Controlled Organization (QCCO) or a Non-Qualified Church-Controlled Organization (NQCCO). When an organization initially establishes its retirement plan with GuideStone^®, the organization will need to determine its QCCO or NQCCO status.

What’s the difference between a QCCO and an NQCCO?

• A QCCO is an organization that:
  • Does not offer goods, services or facilities for sale to the general public, other than those sold at a nominal charge and
  • Normally receives 25% or less of its support from governmental sources or from sales in activities related to its general purpose. In other words, a QCCO receives most of its support from the church or donations. See IRC section 3121(w)(3)(B).
• An NQCCO is generally a church-controlled organization that:
  • Offers goods, services or facilities for sale to the general public, other than those sold at a nominal charge and
  • Normally receives more than 25% of its support from either governmental sources or receipts from admissions, sales of merchandise, performance of services or furnishing of facilities.

But, it’s important to know that status can change over time, especially if the source of funding or services provided has changed.

What are the rules and requirements of QCCOs and NQCCOs?

There are notable differences in the plan operational requirements and allowances of QCCO and NQCCO organizations; some of the main differences are:

If your organization’s status is NQCCO, you’ll need to follow special nondiscrimination rules that don’t apply to churches or QCCOs. If an NQCCO does not comply with the rules applicable to it, the IRS could take action with adverse tax consequences to all participants in the plan. Your organization’s status also affects:

• Whether your plan document must cover 403(b)(1) and 403(b)(7) contracts; and
• What type of deferred compensation plans (such as Code section 457 plans) may be offered to your employees

How can you make this determination?

Periodically review your employer’s status as a QCCO or NQCCO. Take particular care if your organization’s status was difficult to determine. For instance, if the funding your organization receives from outside sources is close to 25% of your organization’s total operating expenses, it may be best to review your organization’s status annually.

GuideStone’s Status Certification Form can help you evaluate whether your organization is a QCCO or an NQCCO. Contact your relationship manager for information about how to complete the Status Certification Form.

If you have questions or need additional assistance, you may reach a customer solutions specialist by calling 1-888-98-GUIDE (1-888-984-8433), Monday through Friday, from 7 a.m. to 6 p.m. CT.

For more information, contact us at info@GuideStone.org or 1-888-98-GUIDE (1-888-984-8433), Monday through Friday, from 7 a.m. to 6 p.m. C.T.

This information should not be considered tax or legal advice. GuideStone stands ready to assist your organization as you work with your legal and tax advisers by providing resource information that you and your adviser may find beneficial.