Leaderboard

Austin, While the owners might be paying union dues and getting benefits, they are NOT union employee (as determined for plan purposes) subject to the union exclusion BECAUSE their employment is not subject to the terms of a collective bargaining agreement. That is obvious when you note their income level. This is key: YOU DO NOT GET TO COUNT THEM AS UNION EMPLOYEES FOR THE ERISA EXCLUSION. Just read the actual definition in your plan document; you will see the standard language of employees whose employment has been subject to good faith negotiations blah blah blah. That does NOT describe the business owners. The union does not set their compensation levels, their benefits, nor their working conditions. You need to be very careful here. In fact, it is even possible that the union can renege on their retirement benefits some day if they get into a dispute with the union; the union will declare that they were never eligible for the retirement plan since they are not subject to the collective bargaining agreement (they most likely will return any money paid by the participants into the plan, but not the dues!). You did not explain enough about the business; are there employees other than the owners? I assume so. You haven't told us what "YOUR PLAN" is or what it is you are trying to do. You mention "maxing them out in this plan" but it is not clear what "this plan" is. But be VERY CAREFUL with these situations. We had some owners in New Hampshire who got burned; a labor lawyer suggested getting a separately written statement from the union saying that they understood that the owners were not subject to the CBA but, nonetheless, the union retirement benefits would not be revoked by the plan for that reason. Even that does not absolutely guarantee it, but it provides something called equitable estoppel if they have to go to court to enforce the benefit. Larry

I'm so sorry for omitting one piece of info that is exceedingly relevant. The owner was in prison for the entire year.

You are wrong, plain and simple. This is why amendments have to be drafted very carefully in order to avoid unintended consequences.

I think you are off base to make the blanket statements you are making above. It totally depends on the actual language and there is nothing abnormal about the language applying to prospectively affect a participant.

There seems to be 2 issues here, eligibility and participation. When the employee was hired February 15, they met eligibility May 15, and became a qualified "participant" on June 1. If, subsequent to June 1, the "eligibility" parameters are changed, it would not retroactively affect a "participant" in the plan. It would effect ineligible employees and eligible employees who have not attained "participation" date in the plan. A change to discontinue participation would be something to the effect of not covering XYZ company in the plan any longer, discontinued coverage of union employees, or other changes in participation -- but, not necessarily changing eligibility to be more restrictive to non-participants.

If this is daily value what do you do with the earnings? What if there is a loss? I think they need to stop doing this or suck it up and say what was deposited is going to be allocated.

So you're saying she already entered the plan on 6/1 and then three months later the eligibility requirements are changed? Now, I know you can change a category of eligibility that would impact a participant, like excluding a division prospectively. But I"m pretty sure you can't change the eligibility for someone already in the plan. I'll see if i can find something on that.

The IRS rules as described above were implemented to extinquish all remnants of what is known as "class year vesting". Option A leads directly to disqualification.