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Correction of Ineligible Employer for SIMPLE

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I posted this originally in the plan corrections board but have not received any response there yet so thought I might post here as well.

I have a client who started a SIMPLE with less than 100 employees.  They have grown over the years and have exceeded the 100-employee threshold for a few years (beyond grace period).  I see the IRS permits "correction" of this ineligible employer issue via EPCRS VCP -- 


by stopping all contributions to the SIMPLE and making the required VCP filing and sinning no more.

Question:  If we make this correction now per VCP, can the client start a new 401(k) Plan to permit contributions for the remainder of 2021?  There does not seem to be any discussion in the EPCRS corrections literature regarding possible establishment of new plan going forward.  I'm concerned because of the general prohibition on making contributions under a SIMPLE for a calendar year if it maintains a qualified plan during the same year.

For a bit of a wrinkle on this, what if the company is being acquired and buyer sponsors an existing 401(k) Plan and demands the SIMPLE be terminated prior to closing.  Can seller's employees participate in buyer's 401(k) post-closing in 2021?  Maybe special transition rules would permit this even if the seller couldn't start their own new 401(k) in the same year?

Thanks for any thoughts.

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