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Author: Amadan00 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75791  
Subject: 401K Date: 4/18/1999 1:15 AM
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Dear Fools,

My Union is discussing a new contract with our company. The subject of 401K's came up and my President asked me to help. In the course of my investigations I found that our sister plant gets a better deal than we do and that our own plant management gets a much better deal than we do. They get a 100% match compared to our 25%. Someone told me that this is a violation of the Employee Retirement Income Security Act of 1974. In that everyone in a company must be offered the same plan. Is this accurate? I have done a fiar amount of digging trying to find out something definate but, so far, it has been a dry well. Can you help? Thanks
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Author: dharmadollars Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10007 of 75791
Subject: Re: 401K Date: 4/18/1999 7:07 AM
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I think most plan documents contain language which says that the definition of eligible employees can preclude those covered by a collective bargaining agreement. Look for this language in your plan document. Also, if this is the case, is it possible that there are multiple plans, one for the union folks and one for the rest? Check it out.

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10009 of 75791
Subject: Re: 401K Date: 4/18/1999 9:16 AM
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Greetings, Amadan00, and welcome. You asked:

<<My Union is discussing a new contract with our company. The subject of 401K's came up and my President asked me to help. In the course of my investigations I found that our sister plant gets a better deal than we do and that our own plant management gets a much better deal than we do. They get a 100% match compared to our 25%. Someone told me that this is a violation of the Employee Retirement Income Security Act of 1974. In that everyone in a company must be offered the same plan. Is this accurate? I have done a fiar amount of digging trying to find out something definate but, so far, it has been a dry well. Can you help? >>

Dharmadollars is correct. Plan provisions negotiated by union contract may differ from those offered to nonunion employees of the same employer. There is no discrimination here, and the differences are perfectly legal under ERISA and the IRC. As long as your plan was the subject of good-faith bargaining between representatives of your collective bargaining unit (i.e., the union) and your employer, the plan you have is considered separately from the plan other employees have. The issue is covered in Treasury Regulation Section 1.410(b) if you want paragraph and verse.

The solution is to bargain for new provisions this time around. Evidently your group didn't do so the last time or traded the lesser 401k benefit for something else.

Regards..Pixy

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