Company owner is also union employee

[digger]

I’ve got a potential new client who owns a carpentry business. He and all of his employees are collectively bargained, and participate in a Union Money Purchase Plan (they also get collectively-bargained health coverage).

 

If the owner were not collectively bargained, I’d feel comfortable saying that he could set up a new DB plan just for himself, since all of his employees are collectively bargained and therefore excludable from N-D testing. What’s not clear to me is whether he can set up a new plan just for himself, given that he himself is collectively bargained.

 

For reference, here is the general rule from 1.410(b)-6 (highlight is my own):

 

(1)General rule. A collectively bargained employee is an excludable employee with respect to a plan that benefits solely noncollectively bargained employees. If a plan (within the meaning of § 1.410(b)-7(b)) benefits both collectively bargained employees and noncollectively bargained employees for a plan year, § 1.410(b)-7(c)(4) provides that the portion of the plan that benefits the collectively bargained employees is treated as a separate plan from the portion of the plan that benefits the noncollectively bargained employees. Thus, a collectively bargained employee is always an excludable employee with respect to the mandatorily disaggregated portion of any plan that benefits noncollectively bargained employees.

 

Any insights are welcome.

[ERISAAPPLE]

Talk to a lawyer who understands unions.  There is some rule that limits the extent to which owners can be union members. I'm not sure of all the twists and turns of that rule though, and I see a lot of owners who claim to be a union member.  

[C. B. Zeller]

Presumably the owner must be doing some non-union work; as the management, after all, he would be the other party in the collective bargaining agreement.

In the next paragraph of the reg you quoted, 1.410(b)-6(d)(2)(i) it states "An employee who performs hours of service during the plan year as both a collectively bargained employee and a noncollectively bargained employee is treated as a collectively bargained employee with respect to the hours of service performed as a collectively bargained employee and a noncollectively bargained employee with respect to the hours of service performed as a noncollectively bargained employee."

I think as long as you can account for the non-union hours, you can base a plan just on those hours (and presumably the comp paid just for those hours). However I can't disagree with ERISAAPPLE's suggestion to get advice from an attorney first.

[ESOP Guy]

This conversation has come up before.   This might help. 

 

[digger]

All good information. Thanks for the leads and background.