Relationship between Union Contracts & Plan Document

[Guest CRC02]

What is the authority of union contracts versus the plan document? Is there ever a situation where union contracts control the way the plan is administered rather than the plan document? To avoid having to amend each time a new contract is negotiated, can you incorporate the contract into the plan document by reference by inserting language like "the contribution percentage set forth in the current collective bargaining agreement between X and Y"?

[Carol V. Calhoun]

We have on occasion provided that the benefits under the plan shall be as provided by the Board of Trustees, which shall make its judgments in the form of written documents which shall be considered amendments to the plan document. I would think that you could do something similar with union contracts, provided that this is permissible under applicable state and local law. There is no federal requirement that the entire plan be incorporated into one written document. Indeed, we have been successful in providing, for example, provisions from a state constitution, a statute, a set of regulations, and a set of administrative procedures to the IRS as the "plan document" when requesting an IRS determination letter on a plan. The only thing to remember is that if any employee requests a copy of the "plan document," the office responsible for providing it should be instructed to give the participant copies of all documents that make up the plan document.

[Guest KCW]

My employer's state and local 401(a) DB and DC plans' documents incorporate references to the employer/union MOU in their definitions of the employee classes eligible to participate. (see excerpt, below)

Eligible Employee

Any Employee who is a Director of the Employer, or whose customary employment by the Employer is for at least 20 hours per week and at least 5 months per year, excluding individuals who are employed in a work-experience or student intern classification under the personnel policies of the Employer, Employees whose collective bargaining agreement does not provide for coverage under the Plan, individuals who are "leased employees" within the meaning of section 414(n) of the Code, and any other individual who is not classified by the Employer, in its discretion, as an employee under section 3121(d) of the Code. Excluded individuals include (but are not limited to) individuals classified by the Employer, in its discretion, as independent contractors, non-employee consultants, employees of a person or an entity other than the Employer and individuals whose basic compensation for services for the Employer is not paid directly by the Employer.

Such individuals shall not be Eligible Employees even if the classification by the Employer is determined to be erroneous, or is retroactively revised. In the event the classification of an individual who is excluded from the definition of Eligible Employee under this paragraph is determined to be erroneous or is retroactively revised, the individual shall nonetheless continue to be excluded from the definition of Eligible Employee and shall be ineligible for benefits for all periods prior to the date the Employer determines its classification of the individual is erroneous or should be revised. The foregoing sets forth a clarification of the intention of the Employer and prior Plan provisions regarding participation in the Plan for any Plan Year, including Plan Years prior to the amendment of this definition of "Eligible Employee."

(emphasis mine)

I included the entire section pertaining to eligibility for those interested in how a plan doc may incorporate the recent IRS T.A.M. regarding exclusion of employee classes from plan participation.