Dear Fools, My Union is discussing a new contract with our company and the subject of 401k"s arose. My President asked me for help and in the course of my research I found that one of our sister plants gets a better deal and our own plant management gets a much better deal. 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 everybody in a particular company has to be offered the same plan. Is this accurate? I've done a fair amount of digging but can't find anything concrete. Can you help? Thanks!
ERISA only requires that the "highly compensated employees" do not get a significantly better deal than the "nonhighly compensated employees". Generally, "highly compensated employees" earn over $80,000. It is not uncommon for a company to have one plan for its salaried workers and one plan for its hourly workers. The exact rules can be found in the Infernal Revenue Code Section 410(b) & 401(a)(4).Additionally, i beleive, that ERISA doesn't require the above statement to apply to benefits that are collectively bargained. The reasoning is that collectively bargained benefits are chosen by the employees themselves and they choose how to allocate their compensation. A nonbargained employee only gets the benefits that the corporation decides to give them.
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