DDB BN Posted February 19, 2020 Share Posted February 19, 2020 SHM 401k plan with age 21 and 1 year eligibility, excludes union employees. A non-union employee has been contributing to the SHM non-union plan for several years. During 2019, he switched to a union employee but is continuing to make deferrals to the SHM non-union plan. His Shop Steward told him that "since he cannot contribute to the union 401k for a year, he can continue his SHM 401k Plan contributions until that time." Is this accurate? Since he already completed the one year of service requirement with the Employer as a non-union employee, shouldn't he be able to enter the union 401k plan on the date he switched? Link to comment Share on other sites More sharing options...
Lou S. Posted February 19, 2020 Share Posted February 19, 2020 What does the plan document say? I would think most plans would treat that as a change in classification and the service in one class would count toward eligibility in the other when they changed classification. Link to comment Share on other sites More sharing options...
Larry Starr Posted February 19, 2020 Share Posted February 19, 2020 33 minutes ago, DDB BN said: SHM 401k plan with age 21 and 1 year eligibility, excludes union employees. A non-union employee has been contributing to the SHM non-union plan for several years. During 2019, he switched to a union employee but is continuing to make deferrals to the SHM non-union plan. His Shop Steward told him that "since he cannot contribute to the union 401k for a year, he can continue his SHM 401k Plan contributions until that time." Is this accurate? Since he already completed the one year of service requirement with the Employer as a non-union employee, shouldn't he be able to enter the union 401k plan on the date he switched? More than likely, the "shop steward" is wrong (because shop stewards are ALWAYS wrong!). At the time he moved into an excluded class in the non-union plan, he most likely was NO LONGER ELIGIBLE to defer into that plan! That is probably one error that needs to be fixed. Of course, do read the FINE document to make sure there is no special language that says otherwise. As to the Union Plan, what is the eligibility to enter? More than likely it includes language that handles this, and I doubt it requires one year of UNION participation (vs ANY employment with the employer) and he probably was eligible upon the transfer, but RTFD to make sure of the applicable provisions. rr_sphr 1 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...
DDB BN Posted February 19, 2020 Author Share Posted February 19, 2020 The non-union plan indicates that: If an Employee who is not an Eligible Employee becomes an Eligible Employee with respect a particular Component of the Plan, then the Employee will participate in the Plan immediately with respect to such component so long as the Employee (a) has satisfied the minimum age and Service requirements for that component, and (b) would have previously become a Participant with respect to that component had the Employee always been an Eligible Employee with respect to such component. The participation of a Participant who is no longer an Eligible Employee with respect to a particular Component of the Plan will be suspended and such Participant will be entitled to allocations for the Allocation Period with respect to such component only to the extent the Participant, while he or she was an Eligible Employee for that component. We do not know what the union plan says. The employee should no longer be part of the non-union plan but the union rep told him to continue making contributions to the non-union plan until he meets the 1 year requirement in the union plan. We disagree with this statement. Link to comment Share on other sites More sharing options...
Larry Starr Posted February 19, 2020 Share Posted February 19, 2020 58 minutes ago, DDB BN said: We do not know what the union plan says. The employee should no longer be part of the non-union plan but the union rep told him to continue making contributions to the non-union plan until he meets the 1 year requirement in the union plan. We disagree with this statement. The union rep has no business giving advice on the non-union plan; he is obviously wrong. Correction will be required. You don't need to give advice on the union plan; that's the union's job. While I would be interested in knowing what the union plan says, if you aren't administering it, it's not your responsibility to interpret. However, I would ask the employer to ask for a copy of the plan (he's entitled) and I would check it just so that employer will know the correct answer for his employee who has switched. 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...
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