Union Plan - Union Covers all Full-Time Ee;s

[austin3515]

Have a plan that covers ONLY Union Employees. It just so happens that all the full-time employees of this organization happen to be hihgly paid skilled professionals, and they get quite a generous contribution and make a decent salary; some earn more than the $115,000.

Is there some sort of a piercing of the coverage exemption? There is no plan covering the part-time staff. To make this really controversial, let's assume they work 1,100 hours a year and make up 40% of the workforce, and average benefits would never pass...

Of course, the union covers the "trades people" - coverage in the union is not based on how many hours you work.

[ETA Consulting LLC]

Just shooting from the hip, I believe 410(b) applies separately to each Collectively Bargained Unit. You may have more than one union, but each union would constitute their own population with respect to non-discrimination tests. With that said, the rules still apply when comparing the benefits of the HCEs to the NHCEs within that particular union. Also, to my knowledge, there is no exemption of unions from the rules precluding 'service class exclusions'. You cannot have a class defined by a customary work schedule (i.e. part-time) excluded from participation based on that class; you should use hours instead.

Other than that, I believe the tests are, mathematically, the same.

Good Luck!

[austin3515]

I looked it up in the EOB now that I am in the office, and it's one of the shortest write-ups! Collectively bargained plans are deemed to pass coverage. End of discussion. In my case they all get the same percent of pay so nondiscrimination is not an issue. But I did read in the next paragraph exactly what you mentioned regarding each distinct CBA.

[ETA Consulting LLC]

I looked it up in the EOB now that I am in the office, and it's one of the shortest write-ups! Collectively bargained plans are deemed to pass coverage. End of discussion. In my case they all get the same percent of pay so nondiscrimination is not an issue. But I did read in the next paragraph exactly what you mentioned regarding each distinct CBA.

"Like". Keep in mind that the "service class" exclusion (i.e. part-time where the term is defined based on a customary work schedule) is disallowed. I'm not sure this is a coverage issue; at least I never thought of it as being one. Then again, there is an argument that it should matter since the benefits are subject to good-faith bargaining (which effectively deems it to pass coverage). Just something to think about.

Good Luck!

[austin3515]

I've also been struggling with that. I actually began writing the question and then I decided I didn't care what the answer was The quesiton was, could a union exclude exclude people working less than 30 hours per week as a class, and does that create a 410(a) issue?

[ETA Consulting LLC]

The quesiton was, could a union exclude exclude people working less than 30 hours per week as a class, and does that create a 410(a) issue?

My contention is that they cannot. In Welfare Benefit plans, this type of language is acceptable. However, Qualified Retirement Plans seem to have specific rules precluding this type of language; the service class exclusion being the main rule.

Not being a part of that Collective Bargaining Unit is an allowable exception and is deemed to pass coverage. When you actually go inside that particular unit and impose a service class exclusion would appear to be an issue. I didn't fully research to see if the union would be exempted from that rule; but we now know what we don't know

[austin3515]

I was wondering if such a provsion in a CBA was even legal. I wonder if anyone here would know that??

[austin3515]

So my CBA actually defines eligible members as employees who work 20 hours per week. Do we think it violates 410(a) to say the plan covers only collectively bargained employees?

[ETA Consulting LLC]

So my CBA actually defines eligible members as employees who work 20 hours per week. Do we think it violates 410(a) to say the plan covers only collectively bargained employees?

I think it does; as it requires 1040 hours per year. I don't see where a CBA would provide an overriding exception to this rule; even though it does provide a safe harbor for 410(b).

Good Luck!