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You are not wrong

Yes, your prorated 401(a)(17) compensation limit for the 10-month short plan year would be $237,500. The plan document should have language similar to this in the definition of compensation, as related to the compensation limit: If an Annual Compensation period consists of fewer than 12 months, the Annual Compensation limit is an amount equal to the otherwise applicable annual compensation limit multiplied by a fraction, the numerator of which is the number of months in the short determination period, and the denominator of which is 12.

It CAN stay in the account, but doesn't HAVE to. I'd just correct it.

What does "somewhat" related mean? Are all four businesses owned 100% by the same person? Then they are all part of the same controlled group. Did all four businesses in the controlled group adopt the same plan? If there are no other adopting employers outside the controlled group, it is a single employer plan.

For a short plan year the 401(a)(17) compensation limit and 415 limit are prorated 10/12. I'm not sure, but I thought a partner's earned income is deemed to all be earned on 12/31, so you don't prorate income for a short year but you limit the income according to prorated limit.

VCP

I think there's a strong case for the transition rule applying, even though the transaction isn't a typical "merger or acquisition." The intent of the rule is to provide a coverage transition when different businesses with employees move into or out of a controlled group as a result of corporate transactions. Although not necessarily an acquisition or disposition of an entire business by a third party, the two entities here are nonetheless moving from standalone entities (each a separate "employer") into a controlled group (now combined as one single "employer"). So on its face it doesn't seem to be a clear violation of the spirit of the rule. As a more stark example, if X was instead owned 99% by Individual C and 1% by an unrelated company, and X redeemed all 99% of C's stock to become a wholly owned subsidiary of the unrelated company, I think you would be hard-pressed to argue that's not a "similar transaction" to C's sale of stock to the unrelated company. Arguably Corporation X's redemption of C's stock is an "acquisition" of C's stock by X (and C's sale is a "disposition" of the same stock). Arguably A and B have "acquired" C's stock in the sense that their proportionate ownership of all outstanding shares has increased from 66% to 100%. Even if not, I think it can be fairly characterized as a "similar transaction" based on the circumstances. If, instead of having X redeem C's stock, C sold his/her shares equally to A and B, that would have the same effect as the redemption and would fit more squarely into the "disposition" and "acquisition" terminology. I don't have any inside line on the IRS's interpretation, but I read the "similar transaction" provision to mean that, as long as the end result is the same as an acquisition or disposition, the procedural form of the transaction shouldn't change the analysis.

I don't think you can disaggregate otherwise excludable employees on any basis other than the maximum age and service conditions of 410(a). Your disaggregated plans for deferrals will be those with less than 1 year of service (ADP test required), and those with more than 1 year of service (safe harbor). For match your disaggregated plans will be those with more than 3 months but less than 1 year of service (ACP test required), and those with more than 1 year of service (safe harbor).