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Governmental 414(h) Pick-up and Union/Employment Contract Changes


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IRS Revenue Ruling 2006-43 does not permit a participating employee, from and after the date of the “pick-up”, to have a cash or deferred election right with respect to designated employee contributions. Participating employees must not be permitted to opt out of the “pick-up”, or to receive the contributed amounts directly instead of having them paid by the employing unit to the plan.

A collectively bargaining agreement originally said that 3% will be picked up from union employees pay. After several years went by a new collectively bargained agreement raised this to 5% for existing and new employees. Athough participants can't change or opt out of the pick-up contributions can a collectively bargaining agreement or employment contract renewal raise it for existing employees who are having pick-up contributions taken out of pay? My gut tells me no, but I can't find a cite or ruling where the IRS specifies they can't.


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