The top heavy rules allow an employer to elect to perform top heavy testing by combining multiple plans if certain conditions are met. If an employer has both a union plan and a non-union plan, under certain circumstances, the plans may be permissively aggregated for top-heavy testing if the union and non-union plans provide comparable benefits.
If a plan covers only union employees, then the plan is deemed to pass 401(a)(4) testing, and no further IRC 401(a)(4) testing is required.
There are several special rules that apply to union employees when doing coverage testing under IRC 410(b). The most significant of these rules is that if a plan covers only union employees, the plan is deemed to pass coverage testing. See IRC 1.410(b)-2.
If a 401(k) plan covers both union and non-union employees, the union and non-union employees must be mandatorily disaggregated for purposes of ADP and ACP testing.
Union retirement plans are eligible for special coverage and non-discrimination testing rules. However, being a union retirement plan
is not a state of mind. It is not sufficient for an employer to sit down with a leader from the employees and come to an agreement about the employee’s retirement benefits. There are specific requirements for a plan to be considered collectively bargained and a union plan: