Union 401K plans

[Guest KJSpaeth]

Does a plan that covers only Union employees have to worry about passing non Discrim testing. I haven't been able to find anything concrete on this.

[KJohnson]

You still need to do ADP testing.

You get a "pass" on most other testing issues 410(B), 401(a)(4), ACP.

[Guest b2kates]

I thought union plans automatically passed ADP, there being no HCE in the plan by definition.

[KJohnson]

There are a number of higher skiilled trades where union members make over $85K. One of the primary reasons that multiemployer plans were so late to going to a 401(k) arrangement is they knew that obtaining compensation and other data from employers to perform teh ADP test was going to be a big headache.

Actually how the regs got to the ADP test requrement is interesting. The preamble to the (k) regs acknowledges that since a collectively bargained plan gets an automatic 401(a)(4) pass then there should be no need for a corresponding ADP test for discrimination purposes.

However, they then turn around and say that passing ADP is a prerequisite for being a CODA and if you do not pass ADP then you have a non-qualfied CODA and the deferrals are taxable to the employee.

[MGB]

In addition to "higher skilled trades," there are unionized workers in many high-paying professions (some of these are ALL over $85,000):

-professional sports players,

-airline pilots,

-private school professors,

-white collar workers (e.g., insurance companies with everyone unionized except for the very highest executives),

-etc.

[Guest Harry O]

. . . and last, but not least, you have moderately skilled union workers who work heavy overtime. The overtime can push them over the HCE dollar limit.

[mbozek]

If all of the elibible workers e.g, baseball players are paid more than $85,000 what is there to test?

[RCK]

I'd guess that with the possible exception of the pro athlete group, there are going to be some NHCEs in the group. Even the athlete group might have NHCEs if the guys in Podunk Rapids in the rookie league are in the same plan.

RCK