Union and Non-Union

[fiona1]

A plan covers both union and non-union employees. For testing purposes they are treated as separate plans and tested separately. Can the plan specify that the test for union employees use the current year method while the test for the non-union employees use the prior year method?

[Kevin C]

If you are talking about 2008, you are stuck with what the plan says your testing method is. The IRS takes the position that changing testing methods is a discretionary amendment so it must be adopted by the end of the plan year.

I don't see anything in the regulations that would prevent you from doing this for 2009. The plan document may be what determines whether or not you can do it. If you are using a volume submitter or prototype document, you will be limited by the allowable choices written into the document. Our EGTRRA VS document allows coverage of union employees, but does not have any way to elect a different ADP/ACP testing method for the union portion of the plan. You can make other changes to a VS if you submit for a determination letter, but is the change worth the effort? If you have an individually designed document, the ERISA attorney who wrote it should be able to help you.

Anyone else have an opinion?

[Guest Sieve]

I have an opinion.

Oh . . . Since you cannot aggregate the union ADP/ACP & the non-union ADP/ACP, there is no reason to necessarily maintain the same testing methods. I agree with Kevin--you can do it, but you'd have to so provide in the document.

As an aside . . . although I prefer and recommend obtaining FDLs, I suspect those using a VS protytpe document still won't want to obtain one for this small change. And, it probably would pass muster, anyway--the plan certainly is not automatically disqualified with such a change in the absence of an FDL.

[Kevin C]

It wouldn't be automatically disqualified, but you would lose partial reliance on the VS opinion letter. That affects your eligibility for EPCRS, unless you submit for a letter.