Can a union sponsor a 401(k) plan?

[PMC]

An employer employs both union and non-union employees. It sponsors a 401(k) plan just for the non-union employees. The union now wants a 401(k) but the employer maintains they will not include them in their current plan nor will they be the sponsor of any new plan the union employees participate in. There will be no "company" contributions to the union plan and apparently this is not subject to the collective bargaining process. All the members of this union are employed at this particular company. The union maintains that they can sponsor a plan. Is this correct and do they just assume all the duties and responsibilities that an ordinary corporate plan sponsor would?

[Greg Judd]

I'm not clear why this matter wouldn't be a valid bargaining subject under existing federal labor law. I'd urge your contacts to check & doublecheck this point.

[david rigby]

Agree with Greg. I don't think the union can be a sponsor of the plan because the union is not the employer, can't do salary reduction, etc. It sounds like the company is just avoiding the subject.

[KJohnson]

IRC issues aside, the union probably cannot be the sole sponsor or the plan from a labor law context because of Section 302 of the Taft-Hartley Act 29 U.S.C. 186. You would probably have to meet the exception in 186©(5) that would require a joint board of trustees--half appointed by the union and half appointed by management.

I agree with prior comments that this is clearly the subject of collective bargaining but there may be reasons why this is not put on the table. Are you mid-term in an agreement? Is there are reopener? etc.

[Guest hank]

I think Greg is on the mark. Terms and conditions of employment (including employee benefits) most certainly are items that are subject to collective bargaining. It could be that that the employer is simply not willing to negotiate a separate 401(k) plan with the collective bargaining unit, but that is quite different from the legally-incorrect statement that it's not subject to the collective bargaining process.

As to the direct question, I don't think

the bargaining unit itself can sponsor the plan. Labor counsel for the bargaining unit should be asked to render an opinion on that issue if there is any doubt. It sounds to me as if the bargaining unit negotiating team doesn't want to put the 401(k) issue on the table with the employer, or has been told that the issue won't fly with the employer and the team is looking at alternatives.