Union Employees and Top Heavy Plans

[Guest Steve McD]

I have a client with both a 401(k) and an MPP that has just informed me that a good portion of his NHCE's will be joining a Union. He was asking me about the requirements for top heavy because he's worried that their plans will now go top heavy. (The Key's are currently at 47%.) He also want to allow the Union folks to continue to participate in the 40(k). I told him I thought the Union folks were not entitled to any minimum top heavy benefit as long as they were in a plan that was subject to collective bargaining. Any contrary opinions?

[david rigby]

In what way does having employees join a union affect whether a plan is top heavy?

Are those employees exiting the current plan?

[Guest Steve McD]

Sorry, I should have mentioned that the client is concerned that the Union folks will draw out their money under the Plan's hardship provisions and that the Plan will end up top heavy.

[KJohnson]

If the owner wants them to continue to participate, I think to be on the safe side you would want evidence that the contineued participation was a subject of bargaining to avoid the top heavy allocation.

I guess another quesiton is, even if they don't participate, whether you could permissibly aggregate with the collectivley bargained plan to avoid becoming top heavy in the first instance.