Exclude employees based on Employment Classification

[Alex Daisy]

A company wants to allow Union Employees to join the plan and make 401(k) contributions. but does not want them to be eligibile for the Employer Match.

I know this is allowed, but what rules and testing have to be passed in order to allow this?

Any guidance is greatly appreciated.

ALEX

[ERISAnut]

None. There is mandatory disaggregation when testing Union and Non-union. Therefore, when testing the union for coverage, no one benefits for matching.

[Alex Daisy]

None. There is mandatory disaggregation when testing Union and Non-union. Therefore, when testing the union for coverage, no one benefits for matching.

Just to clarify, they can let the Union employees in to make Elective Deferrals, but not allow them to get the match, and no special testing is required to pass coverage?

[BG5150]

None. There is mandatory disaggregation when testing Union and Non-union. Therefore, when testing the union for coverage, no one benefits for matching.

Just to clarify, they can let the Union employees in to make Elective Deferrals, but not allow them to get the match, and no special testing is required to pass coverage?

You will be testing the two groups (union and non-union) independently. Since no one at all will be benefitting under section 401(m) in the union test, you pass coverage for the 401(m) portion for the union folks.