Jump to content

Merging 2 Safe Harbor Plans mid year


austin3515

Recommended Posts

Recent acquisition (last year or two).  Both plans are calendar year.

Scenario A

Both plans have the exact same match formula and eligibility.  Can I merge these plans together mid-year (Say May 1 2020)?  Eligibility would be expanded to additional people after the merger because the surving plan has a more liberal eligibility policy.

Scenario B

One plan with a dollar for dollar match on the first 4%, would merge into a plan with the basic safe harbor match.  I assume this would be a reduction in match?

I know Notice 2016-16 solicits comments on the need for additional guidance, but what are we to do in the interim?  I feel like Scenario A is doable but probably not B.

I saw Tom Poje had posted the idea of changing the plan year ends to create a short plan year, but I just don't think that is realistic in this case.

Austin Powers, CPA, QPA, ERPA

Link to comment
Share on other sites

austin3515, in Scenario B was your idea that after the merger you would run the merged plan with the 4% dollar for dollar for all participants through end of year?

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

Link to comment
Share on other sites

3 minutes ago, austin3515 said:

No - the "big" plan uses the basic match.  So my question was really "Does everyone agree this does not work" (I don;t think it does).

Right. After the merger, you have one plan . The regs require that all NHCEs get the same safe harbor contribution, and you probably can't reduce one group to match the other.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...