Excluding "some" union employees

[Guest penman]

I have a situation where the owners of a company are also union employees. There are 15 union employees and 5 non-union employees. All non-union ees are NHCE's. All union employees other than the 2 owners are NHCE's. I am wondering if a DB plan can be set up that covers the non-union employees and the owners (regardless of the fact they they are in the union) but takes advantage of the allowable exclusion for the rest of the union employees. In other words the ratio % test would be 5/5 / 2/2 = 100%.

[david rigby]

To what allowable exclusion are you referring? Don't forget that IRC 410 exclusion refers to a CBA and requires that retirement benefits are the subject of good faith bargaining. Mere presence of a union is not the same.

There have been several prior discussion threads related to this topic.

[Guest penman]

Thanks for your response. I am talking about the allowable exclusion from coverage of employees that are subject to good faith collective bargaining.

In my example, let's assume that there is a traditional collective bargaining agreement.

I know what you are talking about regarding the difference between union employees and collectively bargained employees. Earlier this year I looked at a plan for a Dr.'s office that excluded all the employees because they were in a "union". I believe that the Dr.'s office was involved in the type of union scheme mentioned in prior posts. FWIW, the Dr. said that if anyone were ever to approach me with one of those schemes, run, don't walk away.

[Guest penman]

I found the answer to my question from reading an earlier post: 1-410(b)-6(d): (d) Collectively bargained employees (1) General rule --A collectively bargained employee is an excludable employee with respect to a plan that benefits solely noncollectively bargained employees... In my scenario if the owners were in the DB then the plan would not solely benefit noncollectively bargained employees.

[Guest Partly Cloudy]

Since the shake-up on the message boards I can't seem to get my penman username to work, even by changing passwords.

[Dave Baker]

Since the shake-up on the message boards I can't seem to get my penman username to work, even by changing passwords.

Are you trying to log in under the penman username using the same computer that you're using to log in under the Partly Cloudy username?

I suspect it's a "cookies" issue (the little text files that are stored on your computer to make it convenient to log back in the next time).

Try scrolling down to the bottom of the front page of the message boards (http://benefitslink.com/boards/index.php) and click on the "Delete cookies set by this board" link. Then scroll back up and log in using the penman username and password.

Let me know if this works for you; thanks! (OK to post a reply onto this message thread.)

[Guest sharpie]

I asked a similar question over in "Retirement Plans in General", but Penman/Partly Cloudy response over there lead me over here, so I will add my response here in DB land.

The cite you provide (410(b)-6(d)(1) would seem to answer this pretty conclusively. However, the next sentence in that cite seems to allow for commingling of CBA & non-CBA employees:

"If a plan....benefits both cba and non cba employees for a plan year, 410(b)-7©(4) provides that a portion of the plan that benefits the cba ee's is treated as a separate plan from the portion that benefits the non-cba ee's. Thus a collectively bargained employee is always an excludable ee with respect to the mandatorily disaggrated portion of any plan that benefits non cba ee's."

I've worked with plans that cover both cba and non-cba ee's in 1 plan. But in those instances, it was where all cba ee's were in the plan, not picking and choosing which particular division of the cba's are in. In the specific case you started with (similar, but most likely not exactly the same as the one I cited in the other forum), we are looking at whether we can have a few cba's in a plan with other non-cba's, while excluding all other cba's. I see nothing in the above that would prohibit creating such a plan. Let me know if you think otherwise.