mal Posted December 16, 2004 Posted December 16, 2004 Years ago a multiemployer pension fund decided to allow the fund office employees participate in the db plan. None of these employees are highly compensated, nor are they members of the union. A new board would like to discontinue this practice for new hires. What issues does this raise? Can the plan include some and exclude others? Does this cause any testing problems? I would to get a handle on the major issues that need to be examined before starting my research.
SoCalActuary Posted December 16, 2004 Posted December 16, 2004 Two separate issues are here. 1. You must determine if a non-bargained group (the fund office) is permitted to be a sponsoring employer. Apparently, the group has already said that's OK. 2. You have a group of NHCE's (future eligibles) who will cease to enter the plan. That becomes a 410b coverage issue once they pass the statutory exclusion period. If they pass 410b, then it is an acceptable policy to stop allowing new entrants.
david rigby Posted December 16, 2004 Posted December 16, 2004 3. You will have employees working side-by-side with different benefit packages. Is that desirable? 4. Will there be some pressure to "equalize" the total compensation/benefits ? I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
KJohnson Posted December 16, 2004 Posted December 16, 2004 I am not sure there would be 410(b) issue assuming that these are the only non-collectively bargained employees in the plan. The CBs and NCBs would be mandatorily disaggregated and tested separately. If all NCBs are NHCEs then would you ever have a 410(b) problem? Since this is a multi, you might want to check the collective bargaining alumni rules in 1.410(b)-6(d). If any of the staff once were CBs then they may remain CBs under this rule. If you don't have a participation agreement or some other document allowing these folks to participate then you may have some big problems regarding past practice.
SoCalActuary Posted December 16, 2004 Posted December 16, 2004 The 410b question is for the employer - the trust fund. Does the trust fund have any HCE's? If not, then 410b is no issue. If so, then the plan must do the coverage test on trust fund employees. This assumes that no trust fund employees have collectively bargained benefits.
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now