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Union Plan

Kevin C

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On 7/27/2017 at 10:14 AM, Kevin C said:

Looks like some clarification is in order.  Union members in the proposed plan would receive the benefits in the union plan PLUS contributions in the new plan.  Union members not in the proposed plan would receive the benefits in the union plan.  Future non-union employees will be office staff, accounting, etc., not anyone who works on the job site. The supervisors currently work for them and also work union jobs for other companies, depending on the job. The goal is to get them to only work on union jobs with their company. The owners were clear that neither they, nor any of their union employees will leave the union. Besides the benefits, they are construction workers who only work on union jobsites that do not allow any work to be done by non-union labor.   A non-union supervisor would not be able to work the way they need their supervisors to work.


ETA, I agree that they would either be collectively bargained or non-collectively bargained under the regs.  But, I can't find anything dealing with how to classify them if they were to receive some retirement benefits under a CBA and other retirement benefits outside a CBA.  I agree that under one scenario, the same compensation would be collectively bargained under one plan and not under the other. I'm just not sure that's any more of a strange result than the other scenario having a plan that is not maintained under a CBA get a free pass on 410(b) for the portion of the plan covering union employees. If labor law prevents this, that would explain the lack of guidance.  It will be interesting to see what their labor attorney says.  The owner also said he would contact the union.

Classify them as a lawsuit waiting to happen from the union. You just can't do this.

Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC
Qualified Plan Consultants, Inc.
46 Daggett Drive
West Springfield, MA 01089

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1 hour ago, Larry Starr said:

MIke, we mostly agree, except....

They are not covered by the CBA as owners; therefore, they do not get the free pass as 
"union employees".  Usually, there is NO "union compensation" because they don't have to pay themselves according to the union rules. But they might, in order to get certain benefits under the union contract if they are allowed to be members of the union even though they are not covered by the CBA.

Every time I've run into this in the real world, it is more convenient to think of compensation in two parts for all purposes.  The "non-union compensation" has always been north of the 401a17 limit so there is zero practical difference.   I would consider excluding the "union compensation" from the definition of plan compensation even if that would result in lower benefits than a plan might otherwise be able to provide, because clients really like thinking of the two compensation streams as giving rise to separate "benefits".  In the end, though, if restricting compensation in this manner would have a material impact on cost-effective plan design I'm sure I could muster up the courage to convince the client to drop the convenience.

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Mike and Larry, thank you for the advice.  The labor law aspect is something I've never had to deal with before.  I have not heard back from the prospect yet.

Your comments bring up a question about something one of the owners told us.  He said the union sets the minimum compensation level, but employers can pay more.  When he was an employee at other companies covered by this union he always made more than the union minimum. Wouldn't that have the same problems as what he wants to do with a plan? 


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Not at all.  THe key is that the employer may only do things that are authorized under the CBA.  If the CBA sets minimum pay levels, that's fine.  If it sets minimum benefit levels that's fine. If the benefits are not subject to collective bargaining, then providing them is not fine.

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