New Comp

[Guest moltengater]

A 401(k) safe harbor non-elective with new comparability profit sharing plan covers both union and non-union employees. I confirmed with the CPA that the union employees are covered by a collective bargaining agreement that covers retirement benefits.

In addition the 2 owners and one of the owners sons is part of the union group - all three are HCE's.

The plan uses a new comparability profit sharing allocation. I am disagregating the union and non-union employees to test both.

For the non-union employees there are no HCE's.

For the Union Employees there are 3 HCE's. They want to max the two owners contributions up to the 415 limit with minimum contributions to everyone else.

The problem is not all the rate groups pass becuase 2 of the HCE's are younger than all the NHCE's (in the union portion).

In reading the ERISA Outline book it states:

2.b. Collectively-bargained employees. A disaggregated portion of the plan that covers

collectively-bargained employees is deemed to satisfy §401(a)(4) because of the deemed coverage

rule in Treas. Reg. §1.410(b)-2(b)(7). See Treas. Reg. §1.401(a)(4)-1(b)(5). Furthermore, when

testing a nonunion plan (or the disaggregated nonunion portion of a plan), the collectively-bargained

employees are treated as excludable employees in determining whether the rate groups covering the

non-collectively-bargained employees pass coverage, and the contributions or benefits for

collectively-bargained employees would be disregarded in calculating the applicable rate groups

under the nonunion plan (or nonunion portion of a plan).

Can I just max the two owners and give the rank and file union members and non-union members the gateway minimum? Do I even have to give a gateway minimum to the NHCE's - both union and non-union?

Any thoughts would be appreciated.

[Tom Poje]

if I understand things correctly, you always test union and non union separate.

so if there are no HCEs in the non union group I don't believe the gateway would apply to that test.