Union members were mistakenly included in 403(b) plan. Can the plan be

[Guest deedee]

Union members were mistakenly included in 403(B) plan. Can the plan be amended retroactively to correct the error and exclude the union members making it as if they had never been in the plan? What of the IRS?

[mbozek]

You can retoractively exclude the unin members but I dont know how you will remove the contributions from thier accounts if they are 100% vested. I don't know what IRS problems you are worried about. 403(B) plans are not qualfiied plans. It is not illegal for an employer to make contributons on behalf of union members.

[Guest deedee]

There is no worry about contributions as none have been made. The concern is that if the employer mistakenly included union employees into the benefit plan, who could have been legally excluded at the very beginning, may they rewrite the plan to exclude the union employees retroactively? If the employer excludes union employees on the face of the written plan is that discriminatory? Do you have a reference to a statute or regulation that states that union members may be excluded from a plan retroactively?

Thank you for your previous reply.

[mbozek]

D: Benefits provided to union members are negotiated between the union and the employer. If the union did not negotiate the benefits and the members did not approve a collective bargaining agreement that would provide for 403(B) plan contributions there were never any contributions that the employer was obligated to provide. Therefore the plan can be amended to remove the benefits to the union members. Your client needs to retain counsel to review this matter.

[GBurns]

Benefits are only part of the collective bargaining agreement if the agreement says so, they do not necessarily have to be part of any negotiations. You can provide benefits that are not subjected to the agreement or any negotiations.

[mbozek]

GB: I am confused by your comment. Under the federal labor law an employer cannot provide wages and benefits to employees who are represented under a collective bargaining agreement by a union directly without negotiating with the union. An employer cannot provide retirement benefits for union employees without the benefits being negotiated into the collective bargaining agreement unless the union has been decertified as the representative of the employees. I have never heard of an employer providing wages and benefits that are subject to collective bargaining without the terms being included in the CB agreement because the CB agreement is an enforceable contract. It is not the the employer can provide benefits to union members that are not subject to a CB agreement but the federal labor laws do not permit the employer to deal directly with employees who are respresented by a union in wage and benefit matters.

[GBurns]

Here is an example of a very typical and popular CBA structure. The inclusion of the benefit is agreed to in the CBA but the eligibility, definitions , terms, conditions etc are set by the "benefit" not by the CBA.

http://www.calstate.edu/LaborRel/Contracts...Article21.shtml

http://www.calstate.edu/LaborRel/Contracts...Article25.shtml

It is also very popular in smaller companies to not even reference the benefits. The unionized employees get the same benefits that are available to all eligible employees.

It is also very normal in trucking companies who are not part of the Teamsters Master Agreement but who have unionized workers, to not have the benefits in the CBA but only reference in the CBA that the unionized employees are eligible for the benefits if they meet the eligibility criteria set for that benefit by that benefit's PD.

[GBurns]

I omitted to point out that when if you follow the link and look for the Cal State 401(b) program you will see that it is not mentioned in the CBA. This is standard practice all around the USA. The 403(b) program in most cases is installed pursuant to a simple Memorandum of Understanding. MOU are used not only for 403(b) programs but is the standard procedure of making changes in a benefits program especially as it relates to providers, after it would be cumbersome to have to go through a new round of bargaining just to replace or add a new carrier etc etc. That is why details are not in or through the CBA.

The below link shows how the 403(b) is handled in the California system:

http://www.csusm.edu/HR/payroll/98.TSA403B.html

provided, of course as it says, that there is a MOU with the particular union allowing those union members to participate.