Company A has a approx. 150 EE's and sponsors a K plan with match. So far so good. Approx. 35% of the participants have just recently become part of a CBA. The negotiation was to keep them in the plan, keep the match the same, but add additional $ to these members. I beleive it would be in the form of a comp to comp non-elective contribution to these selected members. Non-CBA members would not get this.

Better to seperate into 2 plans or can we segregate under 1? I understand the testing part, but not sure about the extra benefit the CB group receives.

thanks.

Who do you represent?

If you represent the company, then you should be aware that some of the biggest bundled service providers have extremely inflexible software programs that wouldn't commodate an arrangement like that, so that may limit your choice of providers if you want bundled service providers and try to use only one plan.

I've had two situations where two of the biggest bundled service providers in the country were unable to accomodate two different vesting schedules under the same plan. In one case there was a different vesting schedule for union employees and in the other situation they wanted to have the employees of a company that they acquired have a different vesting schedule. Those were not small plans either; one had 1,500 participants and in the other case the plan covered 2,500 participants.

On the other hand, if you are using the services of a separate TPA, then you shouldn't have any trouble finding a TPA who could handle such an arrangement in a single plan.

Kirk, good answer. That is what I expected and the client should know this.

Considering one Plan, could you run down some of the ERISA complexities for the above mentioned. In particular the Union members getting an extra benefit that the rest would not recieve. I am assuming under one plan, you can carve out the union people and test seperately?

Thanks

You assume correctly. When testing the non-union employees, the union employees are excludable provided their retirement benefits were subject to good-faith collective bargaining, less than 2% were professionals, blah blah...

FJR

We do exactly what you are propossing. Various union groups around the country have bargained for different benefits that are are within the 401k plan. One union plant get flat amount per hour paid, couple get percentages of comp at end of year.

It issue with the TPA comes down to their inflexible systems. We solved that by calculating all contribution in our payroll systems. We don't have TPA calculate anything. We deicide the amounts, label them and TPA posts them.

Blinky said it - blah blah less than 2% professionals, subject to good faith bargaining. You can give the union folks LOTS more than non-union and as long as they are subject to bargaining agreement you don't have to compare the two groups in testing. But each group - union and non-union- must past discrim tests.