Employer with union employees must participate in a multiemployer plan, but would like to establish a safe harbor 401(k) plan for non-union employees.

[katieinny]

Does the employer need to be concerned about the plan provisions or contribution levels going into the safe harbor 401(k) plan for the non-union employees, as long as the union employees are participating in the multiemployer plan? In other words, does there need to be any syncronization of benefits between the two plans?

[JanetM]

Actually, the employer could not provide any benefits to union employees and rich benefits to non union employees and still pass discrimination tests. Participation in the multi doesn't matter.

In reality the employer should be cognizant that the two groups will have a vauge itdea of what the other group gets. They could be fostering a very bad environment if they play favorites. This could also result in added pressure during collective bargaining.

One alternative - instead of increasing benefits by formula, offer some kind of bonus and the opportunity to defer the entire bonus.

[katieinny]

Your first sentence said it all. They need to be concerned about passing the discrimination tests, which won't happen if the safe harbor plan is funded at a much higher rate than the multiemployer plan.

[austin3515]

If you read what she said closely you'll see she said just the opposite (I had to read it a couple of times myself). That's because you need not consider union employees for discrimination testing (they are "excludable"). Well unless you have any 401(m) component of the plan in which the union people participate (I think? Kind of an odd catch, but I'm pretty sure it's there).

[katieinny]

Okay -- I'm confused. JanetM: can you rephrase your first sentence?

[austin3515]

Rephrased: Actually, the employer could CHOOSE TO NOT provide any benefits to union employees and rich benefits to non union employees and still pass discrimination tests. Participation in the multi doesn't matter.

If you read the rest of her comments it's quite clear that this is what she means.

[katieinny]

Yes, now it makes more sense and I can see what she was trying to say. Thanks for straigtening me out.

[JanetM]

Thanks for answering for me austin. That is exactly what I meant. Sorry for confusing you Katieinny.