MAM08

Thanks again.

Just so I'm clear, the bargaining parties wouldn't be prohibited from agreeing that a unit would be allowed to participate in the profit-sharing portion of a multiemployer plan, but not the 401(k) portion? In this case, the exclusion would be based on participation in the employer's 401(k) plan. Thanks for the help, much appreciated.

Here's the situation: An employer sponsors a company 401(k) plan, covering collectively bargained and non-collectively bargained employees. The collectively bargained employees also participated in a multiemployer money purchase plan, with an hourly contribution set out in the CBA. The multiemployer money purchase plan converted to a profit sharing/401(k) plan. The profit sharing component is essentially the former money purchase contribution. The employer does not want to participate in two 401(k) plans for several reasons. It might be open to participating in the newly converted multiemployer plan if it only has to continue the employer contribution (the profit sharing contribution) and its employees will be prevented from making deferrals to the multiemployer plan. They would continue to be able to make elective deferrals to the company 401(k) plan. Would excluding these employees from the ability to make elective deferrals to the multiemployer plan violate the one-year elgibility requirement? I think it would, but one could argue that a blanket exclusion is different than an eligibility period. Even if this would otherwise violate the one-year eligibility requirement, the employees will still be able to make deferrals to the company 401(k) plan. Would this be enough to justify prohibiting deferrals to the multiemployer plan? Finally, if there is a way to do this, is there an advantage to having the prohibition on deferrals to the multiemployer plan included in the CBA and/or adopted by the multiemployer plan's trustees (e.g., "participants who are eligible to make elective deferrals to a company plan shall not be permitted to make elective deferrals to this plan"). Thanks.

Thanks both for the input. vebaguru -- Our situation is that we won't have one CBA. It's not a single master agreement, but a number of agreements with different employers in various industries, each providing for participation in the multiemployer plan/VEBA. Until now, all the CBAs have been with the same local union. If we accept the new group, it would not only be a different local union, but an affiliate of an entirely separate international union. I'm concerned that this wouldn't satisfy the employment-related bond. I agree that if we had a single CBA we'd be fine, but am doubtful that multiple CBAs would suffice (at least where there isn't a common employer or industry). jmc51-- I'll check out your suggestion about the ©(5). In different contexts, our accountants have cautioned us against converting from/to a ©(5), but I think only because the cost/hassles outweighed the benefits.

I posted this the other day on the multiemployer forum and haven't gotten a reply, but think it might be more appropriate here.... Our client is a collectively bargained multiemployer health and welfare Plan and VEBA that has limited participation to bargaining units represented by a single local union and non-bargaining unit employees of their contributing employers. It covers participants engaged in a number of industries in a relatively limited geographical range (primarily several contiguous counties). The client has recently received an overture from a bargaining unit affiliated with an entirely different international union which would like to join the Plan. If the trustees accepted this group, it would be the first unit not affiliated with the sponsoring union. The new group is engaged in one of the industries currently covered by the Plan and within the Plan’s geographic region. If this new group is accepted, would this jeopardize the Trust’s VEBA status because of the absence of an employment-related bond?. I've been unable to find any IRS guidance on this question. I'm stuck on Treas. Reg. 1.501©(9)-2(a)(1) which reads: “Typically, those eligible for membership in an organization described in section 501©(9) are defined by reference to a common employer (or affiliated employers), to coverage under one or more collective bargaining agreements (with respect to benefits provided by reason of such agreement(s)), to membership in a labor union, or to membership in one or more locals of a national or international labor union. For example, membership in an association might be open to all employees of a particular employer, or to employees in specified job classifications working for certain employers at specified locations and who are entitled to benefits by reason of one or more collective bargaining agreements.” On the one hand, the regulation could be read to say that either coverage under any CBA or membership in a labor union will suffice as an employment-related bond. But I wonder if this is too broad a reading and some other employment-related bond (e.g., common union affiliation, common industry) is required. Another way to ask this, is whether any Plan provided for in a CBA will automatically satisfy the employment-related bond requirement? Thanks for any input.

Our client is a collectively bargained multiemployer health and welfare Plan and VEBA that has limited participation to bargaining units represented by a single local union and non-bargaining unit employees of their contributing employers. It covers participants engaged in a number of industries in a relatively limited geographical range (primarily several contiguous counties). The client has recently received an overture from a bargaining unit affiliated with an entirely different international union which would like to join the Plan. If the trustees accepted this group, it would be the first unit not affiliated with the sponsoring union. The new group is engaged in one of the industries currently covered by the Plan and within the Plan’s geographic region. If this new group is accepted, would this jeopardize the Trust’s VEBA status because of the absence of an employment-related bond?. I've been unable to find any IRS guidance on this question. I'm stuck on Treas. Reg. 1.501©(9)-2(a)(1) which reads: “Typically, those eligible for membership in an organization described in section 501©(9) are defined by reference to a common employer (or affiliated employers), to coverage under one or more collective bargaining agreements (with respect to benefits provided by reason of such agreement(s)), to membership in a labor union, or to membership in one or more locals of a national or international labor union. For example, membership in an association might be open to all employees of a particular employer, or to employees in specified job classifications working for certain employers at specified locations and who are entitled to benefits by reason of one or more collective bargaining agreements.” On the one hand, the regulation could be read to say that either coverage under any CBA or membership in a labor union will suffice as an employment-related bond. But I wonder if this is too broad a reading and some other employment-related bond (e.g., common union affiliation, common industry) is required. Another way to ask this, is whether any Plan provided for in a CBA will automatically satisfy the employment-related bond requirement? Thanks for any input.