Arbitration Match Issue

[Guest benefitstudent]

A collective bargaining agreement requires an employer match for that employee group. The employer stops making the match.

The HR manager testifies that ERISA prohibits the company from making the match for that employee group unless it makes a match for all employees in the plan.

I know of no such provision, do you?

Is the employer retention of the match money a prohibited transaction?

Your thoughts and comments are greatly appreciated. Thank you.

[QDROphile]

The collective bargaining agreement is separate from the plan. If the plan does not say that a match should be made then the plan has no problems under its regulatory scheme. The employer may have a problem under the labor agreement. Even if the plan calls for a match, failure to contribute could disqualify the plan, but would not be a prohibited transaction. The ERISA regulations specify when elective amounts become plan assets, but there is no similar regulation that applies to nonelective employer contributions.

The story about the match seems flawed, which makes your entire post sound like it comes from an assignment or an exam. Why don't you try to answer the questions yourself and then seek comments on your answers, assuming that is within the rules?

[Guest benefitstudent]

The collective bargaining agreement is separate from the plan. If the plan does not say that a match should be made then the plan has no problems under its regulatory scheme. The employer may have a problem under the labor agreement. Even if the plan calls for a match, failure to contribute could disqualify the plan, but would not be a prohibited transaction. The ERISA regulations specify when elective amounts become plan assets, but there is no similar regulation that applies to nonelective employer contributions.

The story about the match seems flawed, which makes your entire post sound like it comes from an assignment or an exam. Why don't you try to answer the questions yourself and then seek comments on your answers, assuming that is within the rules?

[Guest benefitstudent]

Thank you for your response.

Odd though it may seem, this is not an exam question. It is from an arbitration. The question posed is whether the contract langauge "shall match" is mandatory or discretionary, as the employer claims.

I have not seen the transcript but was told that the company witness testified that ERISA prohibited the company giving a match to one employee group and not to others.

My response was that it was permissible if it was required under the CBA. That a match in that context would not be a concern under ERISA anti-discrimination testing.

I appreciate your point about qualification versus PT.

[QDROphile]

When it comes to labor relations, mendacity, ignorance and foolishness are rampant.