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Universal Availability Requirement for 403(b) Plans That Exclude Union Employees
BenefitsLink Message BoardsLink to more items from this source
Feb. 11, 2021

"Treas. Reg. 1.403(b)-5(b)(4)(ii)(B) provides that one can exclude employees who are eligible under a 401(k) plan of the employer (my emphasis). An employer sponsors a 403(b) plan that excludes union employees. The union employees also can defer into a 401(k) plan. I don't yet have information here, but I don't have much contact with union plans. I'm not sure whether the employer is technically the plan sponsor, or whether the union is the plan sponsor. Would that matter? If the employees are eligible to defer into the 401(k) plan, wouldn't the employer need to be a 'participating employer' in the union plan in order to even submit deferrals on behalf of its employees?

Also, what happens if a collective bargaining agreement excludes union employees, but there ISN'T a 401(k) plan? This would seem to require a change in the CBA, or the 403(b) plan would be in violation of the universal availability requirements. Anyone ever seen such a situation?"

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