Schedule T question...

[fiona1]

This is a question of how to properly complete Schedule T for a unique situation. The plan is a Defined Benefit plan that was established to cover employees that are collectively bargained (within the meaning of Treasury Reg Section 1.410(b)-6(d)(2)), as well as employees that are not collectively bargained.

Effective 12/31/2003, the plan became frozen with respect to the employees that are not collectively bargained. The plan remains active for collectively bargained employees. Therefore, collectively bargained employees benefited under the plan in 2004, but employees that are not collectively bargained have not accrued additional benefits since 2003.

Under the mandatory disaggregation rules, the portion of the plan that benefits collectively bargained employees is treated as a separate plan from the portion of the same plan that benefits noncollectively bargained employees. Under the Schedule T instructions, it states that if a plan is disaggregated solely because it benefits both collectively bargained employees and noncollectively bargained employees, to complete the Schedule T with respect to the portion of the plan that benefits noncollectively bargained employees. It also states that no information is required for the part of the plan that benefits collectively bargained employees.

For 2003 and prior years, Schedule T was correctly completed for the portion of the plan that benefited noncollectively bargained employees. The portion of the plan that benefited bargaining employees was not reflected on Schedule T. For 2004, how should one complete Schedule T?

1. Since no noncollectively bargained employees benefited under the plan in 2004, do we ignore the mandatory disaggregation rules (for bargaining and nonbargaining) since this plan does not benefit employees that are noncollectively bargained? Would we treat this as a plan that benefited only bargaining employees and mark Line 3c only?

2. Do we continue to view this as a plan that is subject to mandatory disaggregation for the collectively bargained and noncollectively bargained portions? If so, is it correct to complete the Schedule T with respect to the noncollectively bargained employees? If so, would it then be correct to mark Line 3b (No HCEs benefited) because that is a true statement if no employees accrued a benefit in 2004 (because of the 12/31/2003 freeze date)?

3. Would it ever be correct to mark both Lines 3b (with respect to the nonbargaining employees) and Line 3c (with respect to the bargaining employees)?