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Special Agreements -
Frequently Asked Questions
What is a Special Agreement?
A
Special Agreement is a contract between the employer and the Alaska
Electrical Health & Welfare, Legal, Pension, or Money Purchase Fund.
It is not a contract with IBEW Local 1547 or the Alaska Chapter NECA.
A special agreement allows an employer to provide benefits through the
Alaska Electrical Trust Funds to their non-represented employees that
are similar to the benefits union employees receive.
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Will one Special Agreement cover all the
benefits?
No. The Health
and Welfare, the Legal, the Pension, and the Money Purchase Funds
are separate, legal entities. A separate Special Agreement is
required with each Fund the employer wishes to participate in.
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What is
an alumni?
An “alumni employee”
is an employee who has, during a current or prior plan year, earned
a benefit (a year of service) under the Plan (Pension or MPP, as
applicable) and at least one-half of his or her total hours of
service for that year with any and all employers required to
contribute to the Plan were performed as a member of a unit of
employees covered by a collective bargaining agreement, as defined
in the Plan..
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May I select "alumni only" for Health & Welfare
(H&W) or Legal Plans?
There are no alumni
provisions for the H&W Plan or the Legal Plan. The alumni
provision applies only to the Pension and Money Purchase Plans.
IRS and Department of Labor regulations effectively prohibit H&W and
Legal Plans from offering alumni only provisions.
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Who is covered under a H&W or Legal
Special Agreement?
H&W and Legal Special
Agreements always cover “all non-bargaining unit employees”, which
are defined as any other employees on the payroll that are not
covered by a collective bargaining agreement. This includes an
owner’s spouse and children if employed. For example, if both
the owner and spouse each work 120 hours or more in a given month,
then monthly premiums are due for each of them under a H&W Special
Agreement if the full-time option is selected.
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Who
is covered under a Pension or Money Purchase Special Agreement?
An employer may elect
to cover either all of the non-bargaining unit employees or only the
alumni employees.
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Is an owner covered under a Pension or Money Purchase Special
Agreement?
An owner is defined as a person that
owns more than 50% (including interests owned by their spouse) of an
employer. An owner may be covered under a Pension (or Money
Purchase) Special Agreement.
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Which employers may participate in a
Special Agreement with the Trust Funds?
An employer must be
“active in the electrical industry” to participate. That is,
the employer must be signatory to a collective bargaining agreement
with IBEW Local 1547 and actively pursuing work for bargaining unit
employees within the electrical industry. If an employer
becomes inactive, they need to formally terminate their Special
Agreements by notifying the Trust Funds in writing 30 days prior to
the termination date. Please note that if an employer
terminates a Pension Special Agreement, any past service credit
received under that agreement will be cancelled.
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Is participation voluntary?
Signing a Special Agreement with the
Trust Funds is completely voluntary. Approval of the Special
Agreement is at the discretion of the Trustees. Please note
that once an employer signs a Special Agreement, they are obligated
to continue to contribute according to the terms of the agreement.
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Are there any other obligations
under a Pension or Money Purchase Special
Agreement?
For a plan to remain qualified
(contributions are tax deductible), the IRS requires
"non-discrimination" testing each year. The purpose of the testing
is to prevent companies, and corporate families, from providing
disproportionate benefits to their highly compensated employees. For
discrimination testing purposes, the IRS requires an employer to
include all of the companies that the employer has a controlling
interest in, and to include any company that has a controlling
interest in the employer. In general, the obligation of the employer
to provide benefits comparable to those available under the Special
Agreement would flow to its parent corporation, any subsidiaries the
parent corporation has a controlling interest in, any companies that
the employer has a controlling interest in and any other companies
that are part of a "controlled group" with the employer under
Section 1563 of the Internal Revenue Code.
For the Pension and MPP
Plans, the employer must fill out a questionnaire at the beginning of
each year identifying whether or not they are a member of a controlled
group of corporations, the number of employees, and their wages for
the previous year. The questionnaire is used by the Trust Funds
to gather information necessary to prepare Form 5500 for the IRS and
conduct the non-discrimination testing required by the IRS.
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Can I change the health & welfare plans I initially selected for my
employees?
Beginning in 2004, employers may
change the health & welfare plans they have selected during an open
enrollment period. The plan selection will affect all
employees covered under the Special Agreement, employees may not
individually select plans. The Trustees have traditionally
declared the month prior to a rate increase as the open enrollment period.
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