safe harbor 401k and union employees

[Santo Gold]

An employer wants to start a safe harbor 401k plan, but also wants to include union (collectively bargained) employees in the plan. For these union people, the employer wants to give them a fixed contribution, but they want it to be something less than the 3% non-elective for all non-union people. Is this allowed in a safe harbor plan and if so, does it affect the 401k test in anyway?

Thank you

[JanetM]

In K plans you are allowed to disaggregate the union and non union groups for testing. The union folks have to pass ADP/ACP testing. You are allowed to have dual formula like you propose and still be safe harbor plan for non union folks.

You only have an issue here if you have any union HCEs.

[Santo Gold]

Thank you JanetM. After researching this some more and looking at some old posts, I was arriviving at the same conclusion.

[MWeddell]

To clarify, one must disaggregate the union and nonunion employees for testing purposes. This assumes that benefits were the subject of good faith collective bargaining and that the union doesn't cover only professional employees.

Second point: there is no ACP testing for union employees.

I agree with the more general point, that the plan design can be a safe harbor design for the nonunion employees.