I have a client that wants to allow his union employees to be eligible for the plan but does not want to give them a matching contribution as he does for everyone else now. Is this allowed and how do we go about doing this. Should we have 2 seperate plans one for reg employees and one for union members. How does this affect testing.

Hi. I have the exact same situation. Did you ever receive a response? What did you conclude?

I have reviewed the (k) regulations and the issue of making an election regarding employer contributions and can't seem to find anything directly on point.

Thanks in advance!!

You can do that with one plan. Since you are allowed to disaggregate the union group for testing, and therefore test them like they are a separtate plan, you will not suffer in ACP for not matching.

You can even give the non union group safe harbor contributions if you want.

Correct me if I am wrong, but you can only do that if the union employees are covered under a collective bargaining agreement that covered retirement benefits. I am getting the impression that these union employees are not covered under a CBA.

Sorry if I was not clear, but these employees are covered by the CBA which addresses retirement benefits.

The other issue I have seen is whether such CBA employees would be eligible to elect in and out of the matching contribution of the 401(k) plan (i.e. would the employee be allowed to be in the (k) plan one year and get employer match and then elect to be a union available plan in a subsequent year and have the employer contribute funds to that plan and not the (k) plan?)

Archimage, yes the CBA has to provide for participation in the plan.

Taxbones, why would employer allow them in their plan if there is Union plan that they have bargained for. Sounds like more work then it is worth in the long run for employer by adding to headcount.

I suppose if that were bargained for you would be allowed to do it. Have seen really stupid things put in CBAs in the past.

Do you think that there is any issue about the one-time election requirement under the 401(k) regulations?