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Agree with MWeddell, apply prospectively. Will of course need to tailor solution based on plan language. Going forward, plan language should be sensitive to issue and better interpretation of regulation.

Deferrals and vested employer sources. The lesser of $100,000 or your vested account balance. They should be sending participants a Summary of Material Modifications with all the information, that's what we sent to our clients detailing the changes and their options.

Well, one can't cut back on a protected benefit. So I am only suggesting that contributions to HCEs could be reduced prospectively. The safe harbor participant notice's required contents includes a description of other contributions and the conditions under which they are made, so one would first have to distribute a supplemental participant notice at least 30 days before the effective date of the change. In short, there are restrictions, but one can do it without losing the safe harbor status for the plan year.

I think it's one of those things that in theory you could do whatever you want - write the merger documentation to say "everything but Roth" - but then the question is "is it a good idea?" And I think the answer is no. I'm a big fan of keeping things simple and this would not be. (The thought of trying to deal with the big conglomerate and their admin people for something out of the norm makes me shudder.) Personally I'd suggest accepting the Roth money (and adding the Roth feature). I'd want to know the reasons for not wanting it and try to address them. Otherwise just don't do the merger at all (unless documentation has already been signed, then they are stuck, IMO).

I don't think this is known for sure. I have some accountants that are trying to sync up retirement plan contributions very carefully "for" the 8 week payroll period, and others that are ok with funding 2019 contributions, and some pre-funding any/all 2020 contributions.

You need to file under DFVCP before the DOL contacts you. The fact that the IRS has contacted you does not disqualify you from DFVCP, only being contacted by DOL can do that. And IRS will typically not assess penalties if you file through DFVCP with DOL. No guarantee that this will work, but I would strongly consider filing amended 5500's right away checking the DFVCP box on page 1 and then go online and pay the DFVCP fee and hope that DOL does not contact you first.

I suggest the employer help set up payroll deduction IRAs with their own bank for any new employee who wants to defer before the one year eligibility is met. There is a rule that if an employer has reason to believe that the IRA contribution will be deductible for the employee, he doesn't have to subject that amount to withholding so it operates much like 401(k) deferrals. Most new employees won't go over the IRA cap anyway.

The major thing you need to be aware of with using different eligibility for deferrals and safe harbor match, is that you no longer get your free pass for top heavy. If the plan ever becomes top heavy, you will be subject to the top heavy minimum, even if the only other employer contribution for the year is the safe harbor match. Other than that, there is no problem with having different eligibility requirements for deferral and match. For the ADP test, the employees who have not completed 1 year of service are disaggregated as otherwise excludable, and as long as they are all NHCE that group does not need to be tested. For the other group they satisfy the ADP/ACP test by way of the safe harbor match.