SIMPLE IRAs - eligible employees

[Guest JPCMPLS]

Can a controlled group of employers adopt a SIMPLE IRA plan solely for its union employees? The model IRS form allows exclusion of union but not non-union. any thoughts?

[Gary Lesser]

Probably, BUT you will need an individually designed plan (and a PLR for assurance) . See IRC 408(p)(2)(D)(i) and 219(g)(5)

[BPickerCPA]

Gary,

Doesn't the SIMPLE have to cover ALL employees, with the exception being union employees covered by a collectively bargained plan?

It looks to me like you could not exclude non-union employees from the SIMPLE, and you could not have another plan for the non-union employees, since you generally cannot have any other plan along side a SIMPLE.

[mbozek]

rather than enduring the expense and delay of a untried theory why not just adopt a simple 401(k) for the union employees?

[Gary Lesser]

I agree, BUT getting a SIMPLE document to allow for the non-union exclusions doesn't exist, so I suggested the PLR approach (assuming a QP wdn't be a better approach). As long as the SIMPLE IRA covered unionized employees only only, (it sd be okay)--said better, should receive a favorable ruling from IRS.

The union must agreed to this or any other plan. To just open a plan for them (i'm told, without bargaining) is an unfair labor practice.