ERISAAPPLE Posted April 4, 2018 Share Posted April 4, 2018 A plan excludes unions and has a last day of the plan year allocation requirement for profit sharing contributions. An employee enters the plan, but later during the year changes job to a union position. Can the plan require a participant to be an eligible employee on the last day of the year to be eligible for an allocation, or is that limited to employment on last day of the year? Link to comment Share on other sites More sharing options...
Larry Starr Posted April 4, 2018 Share Posted April 4, 2018 I have never seen a plan that would exclude this individual based on a last day employment provision. He IS employed on the last day. I'm guess you can write a provision that would exclude some allocations if he is a union employee on the last day, but you still would have to provide top heavy, safe harbor, gateway, and would have to prove it to be nondiscriminatory for participation because you don't get a free pass on those kinds of things for the period of time when he was NOT a union employee. Of course, unless you are rewriting plan language, I am going to bet that our plan will not exclude him for allocations based on his income while not a union employee because it will treat him as employed on the last day (just, employed as a union employee). FWIW. Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC President Qualified Plan Consultants, Inc. 46 Daggett Drive West Springfield, MA 01089 413-736-2066 larrystarr@qpc-inc.com Link to comment Share on other sites More sharing options...
CuseFan Posted April 5, 2018 Share Posted April 5, 2018 Agree with Larry that the plan's general last day requirement would not apply here but that the plan could be amended for such an exclusion. A last day requirement is not a statutory exclusion so you have same coverage testing, but potentially fewer employees benefiting. Person is still employed and entitled to top heavy, as noted, if applicable - and this based on all pay, not just non-union pay, which would apply for safe harbor and gateway purposes. Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com Link to comment Share on other sites More sharing options...
PensionPro Posted April 5, 2018 Share Posted April 5, 2018 § 416(i)(4) exempts union employees from the top heavy rules. What is the basis for this employee's entitlement to top heavy contributions? Never encountered this situation myself. PensionPro, CPC, TGPC Link to comment Share on other sites More sharing options...
ESOP Guy Posted April 5, 2018 Share Posted April 5, 2018 2 hours ago, PensionPro said: § 416(i)(4) exempts union employees from the top heavy rules. What is the basis for this employee's entitlement to top heavy contributions? Never encountered this situation myself. It has been a long time but if memory serves me correctly the TH cont would only apply to the compensation the person was a non-union employee during the year. Link to comment Share on other sites More sharing options...
Larry Starr Posted April 8, 2018 Share Posted April 8, 2018 On 4/5/2018 at 1:44 PM, PensionPro said: § 416(i)(4) exempts union employees from the top heavy rules. What is the basis for this employee's entitlement to top heavy contributions? Never encountered this situation myself. Because he was both a union and non-union employee in the same year. The non-union is entitled to the minimum. Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC President Qualified Plan Consultants, Inc. 46 Daggett Drive West Springfield, MA 01089 413-736-2066 larrystarr@qpc-inc.com Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now