Can a 401k plan exclude Union members?
<p>John Hancock manages our 401k at work, they have under eligibility,</p>
<blockquote>
<p>Excluded employees: Union employees, Nonresident Aliens, and Leased Employees; 21 years of age and 3 consecutive months</p>
</blockquote>
<p>My workplace isn't even unionized. It just shocks me that a 401k can exclude a Union: obviously the Union can negotiate for the members, but can a company say that if you join the union you'll be kicked out of the company's 401k? Also, what happens then if you have a 401k with the company and a union forms and you want to join it?</p>

<p>The reason for that standard boilerplate is that any union members would be covered by the terms of their Collective Bargaining Agreement (often called the Contract).  This isn't an attempt to exclude union members, it's just wording that if you are in a union, your CBA takes precedence.</p>

<p>This <a href="https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/retirement-plans-and-erisa-for-workers.pdf" rel="noreferrer">fact sheet on the &quot;Employee Retirement Income Security Act of 1974&quot; or ERISA</a>, published by the United States Department of Labor, includes this quote:</p>
<blockquote>
<p><strong>Who can participate in your employer's retirement plan?</strong></p>
</blockquote>
<p>...</p>
<blockquote>
<p>Find out if you are within the group of employees covered by your employer's retirement plan. Federal law allows employers to include certain groups of employees and exclude others from a retirement plan. For example, your employer may sponsor one plan for salaried employees and another for union employees.</p>
</blockquote>

<p>As Tiger Guy mentioned, union members have a separate agreement for salary and benefits that typically includes some sort of retirement plan.  Your company is offering a 401k for those who <em>aren't</em> covered by the union's retirement plan.  An employee will either be eligible for one or the other, but not both.  There are all sorts of convoluted tax rules regarding retirement plans that can make it impractical or impossible for an employee to participate in both.  For example, there are limits to how much you and your employer can contribute to your 401k accounts each year.  If you had two 401k accounts (one through the union and one directly through your employer) the limit wouldn't change, it would just be split across two accounts and you'd have twice as many management fees.</p>
<blockquote>
<p>Also, what happens then if you have a 401k with the company and
a union forms and you want to join it?</p>
</blockquote>
<p>This gets treated more or less the same as if you have a 401k and then switch employers.  The 401k account belongs to you.  All the money that you contributed (and any gains that money earned) will remain in the account.  Your employer's contributions (and the associated gains) will remain in the account based on how fully &quot;<a href="https://en.wikipedia.org/wiki/Vesting#Retirement_plans" rel="nofollow noreferrer">vested</a>&quot; you are.  Your employer would no longer be able to contribute to that account.  However, anything in the account would continue to grow and you are still free to make investment changes (move your money from one stock to another, etc).  What many people do with these old 401k accounts is <a href="https://www.schwab.com/ira/rollover-ira/how-to-rollover-a-401k" rel="nofollow noreferrer">roll them over</a>, either into their current 401k with their new employer or into an IRA.  Your accountant and/or financial advisor can help you decide where is the best place to keep your retirement funds in terms of tax consequences, investment options, and management fees.  The key takeaway, though, is that a 401k belongs to <em>you</em>, so you won't lose it if you change employers or to a union-sponsored plan.</p>

united-states labor-law unions