Controlled Group

[Guest kam]

Company A is a member of a controlled group with 3 other affiliated employers (B,C,D) all of who have adopted Company A's plan. B has both union and non-union employees. The non-union employees participate in A's plan. The union employees are covered under a separate plan sponsored by B.

Company A has recently unionized. The union contract states that A must provide retirement benefits for union employees. Must company A set up a separate plan for the union employees?

If so, is the union plan for company A and union plan for Company B tested separately or must they be aggregated?

[jaemmons]

The employer has the option of testing each union separately for ADP testing purposes. Treasury Reg 1.401(k)-1(g)(11)(ii)(B)

This is assuming that the retirement benefits of the union ee's is subject to a "good faith" bargaining agreement, in order to be treated as statutory exclusions under IRC 410(B)(3)(A) and apply these disaggregation rules.

[KJohnson]

To further expound on jaemmons point-- Even if the same union organized both employers, you still may still have the aggregate/disaggregate option if the employees of the two employers are not in the same "bargaining unit".

Thus, for example, if the employers were in different locations and negotiated with different locals of an International, it is likely that the employees would not be in the same bargaining unit.

[Guest kam]

Thanks very much for answering my question!