Transfers between union and nonunion plans.

[Guest revier]

I have a client who is a controlled group and has a union plan with a graded vesting schedule and a nonuion plan with a 100% immediate vesting schedule.

If a union participant transfers to the nonunion plan, do they retain the vesting schedule on the old money being transfred from the union plan to the nonunion plan?

Is a 1099R required? To me this seems like a plan to plan transfer and no 1099R should be issued.

If this is treated like a plan to plan transfer is a 5310A required to be filed?

[Blinky the 3-eyed Fish]

If a union participant transfers to the nonunion plan, do they retain the vesting schedule on the old money being transfred from the union plan to the nonunion plan?

This would be a document specific question. If the document is silent, then I see no reason why you wouldn't be required to provide the new vesting schedule. A solution of course, is to not transfer the balance.

Is a 1099R required? To me this seems like a plan to plan transfer and no 1099R should be issued.

No 1099R required.

If this is treated like a plan to plan transfer is a 5310A required to be filed?

By reading those instructions, you will find this transfer meets one of the exceptions to filing the form.

[JanetM]

Since this person has not had event to trigger distribution. How can you move their funds. The union plan sits and the guy most likely gets new status of transferred. Guy now will participate in non-union plan.

Check the documents. They will tell you, but be wary of just having his money follow him around the plant.

[david rigby]

Sounds like Blinky is right on here. Transferring benefits along with employment change is governed entirely by the plans (plural). If the plans are silent, then money does not move. One hopes that the plans also are specific w/r/t vesting, but if not, see Blinky's comment.

[GBurns]

Why would a participant changing from union to nonunion be a transfer or change in employment or even a change in "status"? What would trigger a distribution?

[Brian Gallagher]

This sounds more like an eligibilty plan. This person is no longer eligible for the union plan and is now eligible for the non-union plan. This is no different than someone whose job is now excluded under a particular plan. There is no distributable event.

[Blinky the 3-eyed Fish]

It's not a distribution. It's a transfer.

[Guest ActuaryWannabe]

There are guidelines for this type of transfer (Reg. §1.411(d)-4 Q3). From that regulation, it looks to me like a transfer of a partially vested benefit to a plan with a different vesting schedule is treated as an amendment to the vesting schedule, and all the same rules would apply. In the case at hand, I am not sure whether the vesting schedule in the disbursing plan would generally be preserved if the schedule in the receiving plan is full and immediate.

[RCK]

We have non-union, and company sponsored union plans, and I think that it is important to note that they are not multiemployer plans. Anyhow, the plans that operate within the same trust with the same recordkeeper have automatic plan to plan transfer provisions. So a union employee who is promoted out of the union, and therefore out of the union plan takes his money with him to the new plan. The vesting schedule on the old funds remains the same, and all service with the employer counts under both vesting schedules.

It is not treated as a distribution. And if he ultimately terminates before 100% vested in the original plan, the forfeiture leaves the successor plan and goes back to the original plan (as kind of a reverse plan to plan transfer).

All plans have determination letters on those provisiions (for what it's worth).

RCK