elimination of class of employees

[Guest lindamichals]

plan wants to, effective 1/1/05, eliminate a class of employees (union) from the plan due to the union now collective bargaining. They have not in the past which is why they were in the plan in the first place. The elimination will reduce the number of participants by more than 20%. Does this qualify for a partial termination in which the former union employee's will be 100% vested? Thanks.

[Blinky the 3-eyed Fish]

Not in my opinion because the union people will continue to earn vesting credits with continued employment.

[mbozek]

I dont know if reduction due to participation in a CB plan would be deemed employer action which triggers a partial termination, since the er did not initiate the elimination of the employees under the terms of the CB agreement. Under fed labor law union can bargain for benefits for its members with employer, including right to have benefits provided in separate plan.

[Guest lindamichals]

What if the er wants to pay them out now because they are no longer a valid class of employee? Then they are no longer earning vesting credit.

[david rigby]

Is this a distributable event under the terms of the plan? Likely not.

But another point might be can the employer unilaterally eliminate this class from (active participation in) the plan? Must examine the plan provisions, and the ER should probably discuss with legal counsel.

[jaemmons]

Also, if the collective-bargaining agreement states that retirement benefits must be provided in this plan, the employer might not be able to "eliminate" them from actively participating in the current plan. In addition, I don't think that moving to an ineligible class would meet the distribution requirements of the plan, especially if the plan contains a CODA, unless the participate leaves the employ of the employer.