Ineligible to participate in 401k because of unionization

Here's the situation. A group of employees recently voted to unionize and negotiations for a collective bargaining agreement has commenced. The current 401k plan offered by the company prospectively excludes union members. Accordingly, the company now wants to establish a separate 401k plan for union employees. There are a number of employees who participate in the current plan will now be ineligible for the current plan and have to switch to the plan which will be established for union members. What are the legal considerations in having employees have to switch plans?  What types of things should we (union employees) be paying particular attention to? We want to make sure people who have to switch plans aren't harmed in the process. Any and all feedback would be greatly appreciated.

I don't see any likelihood of being harmed in any way just by virtue of having to switch plans, but whether you are going to be harmed in other ways depends upon the terms of the CBA which your representatives negotiated on your behalf.  I don't think you'll get the guidance you would like from this Message Board.  You should talk to the individuals who represented you and your fellow employees.   

You need to be very careful.  First, not the plan does NOT exclude union employees.  Read the document again carefully.  It excludes union employees who have bargained in good faith regarding benefits.  Until they have done that bargaining it isn't clear to me they are excluded.  

I am not an expert on this but it is very easy for a company to violate the rules regarding unions and union breaking.  They need to talk to a lawyer who knows both sets of law. 

I will let others comment on some of the other issues as it has been a while since I last worked on 401(k) plans. 

ESOP Guy:  1.  I could be wrong, but the implication from the OP is that the "good faith bargaining" has concluded.  2.  Again, I could be wrong, but I assume from the OP that he is a union member and not involved in the plan design/structure so the warnings you are giving while sound are not something  which HE needs to be careful about.  

To clarify: we do not yet have a contract but have had pretty extension negotiations concerning a retirement plan for employees. We have never dealt with employees becoming ineligible to participate in a 401k and having to switch. We just want to make sure we don't end up harmed somehow in the process of migrating to the new plan.

Who are "we"?  Are you part of management or are you in the union group?  

The union group. We have been negotiating with the company group regarding retirement benefits

1 hour ago, jpod said:

ESOP Guy:  1.  I could be wrong, but the implication from the OP is that the "good faith bargaining" has concluded.  2.  Again, I could be wrong, but I assume from the OP that he is a union member and not involved in the plan design/structure so the warnings you are giving while sound are not something  which HE needs to be careful about.  

Yeah, it is looking like I didn't pick up on that fact.  It is just I have seen the error of saying all union employees are excluded a few times to some people's regret.  

OK, there is (or soon will be) a union (including the good faith bargaining characteristic).  That does not require a new plan.  The company (and maybe the union itself) should consider the pros and cons of creating a new plan vs. using the existing plan.  It's also true (seen it many times) that the union might want neither of those alternatives, so it's good to get advice from someone who has broad experience in qualified plans.

Your union is to you as a sports agent is to his/her player client. I have been involved in many similar situations and shame on the union that does not do its homework. And present its findings to the affected workers. Comparing 401(k) plans is relatively simple. The first question that should be asked is "why?" Why is the employer directing union employees into a separate plan? Bad reason: to be more generous with the non-union employees today or tomorrow. Possible good reason: the combined plan is over, or is close to over, the number of participants required for an audit, which is expensive; whereas dividing the population between plans solves that problem. In latter case, no reason the CBA could not call for the union plan to mirror the non-union plan, as the latter may from time to time be amended.