Guest CRAFTY Posted January 22, 2000 Posted January 22, 2000 I WORK FOR A LARGE CORP WITH MANY LOCATIONS. ALL THE SALARY PEOPLE AT THESE LOCATIONS HAVE THE RIGHT TO TAKE OUT LOANS. BUT THE HOURLY PEOPLE ARE REFUSED AND DENIED THESE SAME RIGHTS. IS THIS LEGAL? HOW DO WE CHANGE THIS. HOURLY CAN GET HARDSHIP LOAN, BUT HAVE TO PAY PENALTY, TAXES, AND CANNOT PARTICIPATE IN THE PLAN FOR ONE YEAR. PLEASE HELP SOMEONE.
Guest Posted January 24, 2000 Posted January 24, 2000 if the salaried people are highly compensated (HCEs = 5% owners, and many if not all ees maing 80,000 in the prior year), chances are you have a discrimination issue. On the other hand, if there are many hourly people who are considered HCEs as well, it may not be a problem. Plans can not treat provide a 'benefit' to HCEs which are not provided to NHCEs. Usually in the summary plan description you should have would be a procedure to follow for grievences. If not, or you still feel you are getting the run around, contact the DOL. Please make sure of your facts before doing so! a hardship is not a loan, but rather a hardship withdrawal. Under the regs, if taken, one can not defer for a year, so plan is following the law on this matter. It is optional whether to withhold taxes on amounts taken from deferrals, so this would appear to be okay as well.
Alonzo Posted January 24, 2000 Posted January 24, 2000 Tom Poje-- Because of the DoL rules require that loans be made on a "reasonably equivalent basis" to participants and beneficiaries, the participant may have a good case, even if there is no discrimination in favor of highly compensated employees. I don't know of any rulings to that effect, but I would be careful about having loan provisions that apply to some plan participants, and not to others. Do you (or anyone else) have any experience about how the Department of Labor is enforcing the "reasonably eqivalent" requirement?
Guest TrustMe401k Posted January 24, 2000 Posted January 24, 2000 One question...Is there a possibility there are two separate plans? One for salaried and one for hourly ee's. Correct me if I'm wrong, but two plans would seem to be able to have separate provisions re: loans/hardships.
Jon Chambers Posted February 11, 2000 Posted February 11, 2000 Most likely, the "hourly" are union employees, so there are no coverage or comparability issues. Loan availability isn't a protected benefit. Many companies use loans as a collective bargaining "chip" in exchange for some other concession from the union. If my guess is correct, the union doesn't want the loan feature badly enough to negotiate it into the plan, and the company won't give up the feature without some concession. And no, this isn't illegal. ------------------ Jon C. Chambers Principal Schultz Collins Lawson Chambers, Inc. (415) 291-3004 Jon C. Chambers Schultz Collins Lawson Chambers, Inc. Investment Consultants
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