401(k) (non-union) and 403(b) (union)

[waid10]

I am new to the HR department of an employer that has both a 403(b) and a safe harbor 401(k) plan. We have both union and non-union employees. We limit the 403(b) to union employees only. All other employees participate in the 401(k). Is this permissible? Is there any kind of discrimination issue to be concerned about?

We also have a subsidiary with all non-union employees. We exclude them from the 403(b) and only allow them to participate in the 401(k).

I am concerned that this is not permitted. I just want to make sure we aren't overlooking something. Are there questions I should be asking?

Thanks.

[Kevin C]

Universal availability is something you should always be concerned about with a 403(b). You can exclude from the 403(b) employees who are eligible to defer in a 401(k) of the employer [1.403(b)-5(b)(4)(ii)(B)]. What are the eligibility requirements for deferrals in the 401(k)? If it's anything other than date of hire, I think you have a problem.

Have you already verified that your employer is an "eligible employer" under 1.403(b)-2(b)(8)(i)?

[waid10]

Universal availability is something you should always be concerned about with a 403(b). You can exclude from the 403(b) employees who are eligible to defer in a 401(k) of the employer [1.403(b)-5(b)(4)(ii)(B)]. What are the eligibility requirements for deferrals in the 401(k)? If it's anything other than date of hire, I think you have a problem.

Have you already verified that your employer is an "eligible employer" under 1.403(b)-2(b)(8)(i)?

Yes, I have verified that the employer is an "eligible employer." And both plans have immediate (date of hire) eligibility to make salary deferrals.

[Kevin C]

I can't think of anything else other than the normal testing issues you would expect with the 401(k) and employer contributions in the 403(b).