Can owner participate in 401(k) plan that excludes union employees?

[Guest dburge01]

Construction Companies A and B are a control group. The owner receives compensation from both companies. In order to land a large contract, Company A has been unionized. The owner falls under the contract for work done with Company A. The current 401(k) excludes union employees. Can the owner still contribute based on compensation received from Company B, or is he excluded completely because he is part of a collectively bargained contract?

[KJohnson]

I don't know if your owner is collectively bargained in the first place.

Even if your owner does bargaining unit work pursuant to a union contract (and contributions are owed on this work) I am not sure that he is "collectively bargained" as that term is used in the Code. Under the Code, to be collectively bargained you must be in the "unit" covered by the collective bargaing agreement. Under labor law, performing collective bargaining work does not mean that you are in the collective bargaiining unit. Owners almost always do not have the "community of interest" with other employees to be included in the unit.

There are, however, certain bargaining unit alumni rules.

Where an employer has collectively and non-collectively bargained employees, and lets a highly comped employee (such as an owner) into a collectively bargained plan while not letting secretaries, estimators etc. in --thiscan be a real problem. The collectively bargained and non-collectively bargained are tested separately for 410(B) and you are going to fail if the only noncollectively bargained employee is an owner.

[R. Butler]

I agree with KJohnson that the owner isn't covered under the collectively bargained contract. Management is not covered by unions.