Excluding union employees from a 401(k)

[betheeg]

We have a client that established a 401(k) years ago. A few years later, a union was formed. The union employees are covered for retirement throught he union, so the client wants to know if there is a way to now exclude these union employees from the company 401(k). Can you do this with a simple amendment? And could the now excluded union employees keep their balance in the plan?

Any thoughts are appreciated....thanks in advance.

[JanetM]

Yes you can exclude union employees from plan. Question is why? Allow them to contribute but don't give emplorer match or anything else. Those who have balances and are still employed would keep the funds in the Plan.

[J2D2]

You just might want to discuss this with the union, before you adopt the amendment. Unions are funny that way.

[betheeg]

so janetm, the plan is just 401(k) deferrals right now, but they are thinking of going to safe harbor. So I'm assuming we could not exclude the union employees from that. And what if they wanted to make a PS contribution? My understanding is that you if you want to exclude a group they are either in or out...you can't just exclude them from certain contributions. Thoughts???

[Guest mjb]

Anytime an employer wants to change benefits provided to employees represented by union it has to negotiate the change with the union under the labor laws. Employer could provide SH for non union and continue to limit union ee to sal reduction and test union ee separately under disaggregation without violating labor laws.

[JanetM]

betheeg,

If you union negotiated into deferal only plan then they stay in going forward. As mjb points out, you have to negotiate any change with the union. The employer can add safe harbor, profit sharing and match at any time. Employer can exclude the union from any or all of these contributions and still pass all cover and non discrimination testing.