Owner excluding union employees from plan

[Guest Mr. Relaxation]

A business owner has a factory shop with 10 employees, including himself, about 8 union ee's, and 1 front office/non-union employee. I believe he makes contributions on behalf of the union ee's to their union retirement plan. His business currently has no retirement plan. He is interested in starting up a PS plan for 2003 and would like to exclude those 8 union ee's. No problem so far, but as it turns out, he also is a member of the same union and apparantly contributes amounts to the same union retirement plan for himself, as well as for the other union ee's.

Is there a problem if he starts up a plan, excludes everyone except front office person and himself? When defining "eligible class of ee's" in the document, can he say "members of the XYZ union, with exception of Mr. Owner, are excludable"? If so, would this take the document out of prototype status, as all other provisions are s/h?

Thanks for any responses.

[rcline46]

First, there is no such animal as a union exclusion. Never has been.

There IS an exclusion for employees whose retirement benefits have been the subject of good-faith bargaining. Check your documents.

Once you have this firmly grasped, then you can determine if the owner, who is a card carrying union member, is actually represented by the union in the bargaining for retirement benefits.

Answer that question, and you have your answer for the plan design.

[david rigby]

Prior relevant discussion:

http://www.benefitslink.com/boards/index.p...ST&f=21&t=13111

[Guest Mr. Relaxation]

rcline46: It was careless of me to use union and cba employees interchangeably, when they are not the same thing. Thanks for the clarification.

Am I correct then, that if company retirement benefits are collectively bargained, and if as part of that agreement, there is no distinction made between the other 8 cba ee's and the owner (being represented as part of the union in this case), then simply writing the document to say "exclude the cba ee's" is not good enough, since this would exclude the owner? The reason I'm confused is that in the thread Pax gave, it seemed automatic in that example that once the sons went from employees to owners, they immediately became eligible for plan coverage, without any additional amendments. Perhaps that was specific to the CBA for that particular company???

In any event, if as it stands now, the owner is part of CBA, would it still be permissible to define in the plan, excludable employee's as "CBA employee's who do not have an ownership share in the company"?

Thanks

[KJohnson]

http://www.benefitslink.com/boards/index.p...st=0entry5531

http://www.benefitslink.com/boards/index.p...t=0entry49951

http://www.benefitslink.com/boards/index.p...t=0entry48830

[rcline46]

The piece you are missing -

OWNER or EMPLOYEE - the CBA only covers EMPLOYEES -

In every case where we have a union, we get a copy of the CBA just to check everything.

[Guest sharpie]

While searching the boards for opinions on the following situation, I came across this post and thought I would add to it.

My situation is similar, but with 1 important difference. The company is run by husband, wife, and his brother. All other employees are union (CBA). husband and brother are also union employees. Here's the difference: On paper, the company is owned 100% by the wife.

So naturally, the 3 of them want a plan to cover them and not the other union employees. I'm not sure if they are providing collectively bargained retirement benefits to the union employees (I doubt it). It might be easy enough to cover the wife, but how to go about covering the husband and brother? Could the document be written to make them eligible employees, by name: For instance: "Eligible employees include all non-collectively bargained employees, except husband and brother?".

Thanks for any comments

[Guest Partly Cloudy]

I don't think the issue is whether or not the husband and brother are owners but simply are they covered by the CBA. If they are then your plan would not be covering solely employees that are noncollectively bargained and therefore the CBA exemption from 410 would not be available.

1-410(b)-6(d): (d) Collectively bargained employees (1) General rule --A collectively bargained employee is an excludable employee with respect to a plan that benefits solely noncollectively bargained employees...

I just went through the same thought process for a proposal. See the DB msg board post "Excluding "some" union employees". I wonder if it's the same company. Uh-oh.