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You could but there is absolutely no point to it. It will end up in exactly the same situation as if you just took the taxable offset. Situation 1: Direct rollover of $14,000 to IRA, loan offset of $3,000. Amount in IRA: $14,000. Taxable income: $3,000. Situation 2: Take cash distribution of $3,000 and roll over the remaining $11,000. Use the $3,000 cash to repay the loan. Now there is $3,000 in the 401(k) plan from the loan repayment, so roll that over to the IRA. Amount in IRA: $11,000 + $3,000 = $14,000. Taxable income: $3,000 from the cash distribution. Note in this case the cash distribution would have mandatory 20% withholding applied, so the participant would have only received $2,400 cash and would have to come up with the extra $600 out of pocket in order to fully repay the loan. It wouldn't change the outcome though.

I've posted some materials addressing also in case it helps: https://www.newfront.com/blog/merger-acquisition-rules-health-fsa-2 2022 Newfront M&A for H&W Employee Benefits Guide

What do the documents say? If the documents says the 5% TH minimum is provided in the DC plan than the 5% TH minimum is provided in the DC plan even if it is more than what is required for gateway or 401(a)(4) testing.

Yup, it's still 5% total in the DC

Alternatively, an employer and a would-be employee might negotiate the employee’s compensation based on the employer’s all-in expenses, adjusting the salary so the employer’s expenses, including for health and retirement benefits, meet what the employer is willing to spend to get the employee (and what makes the employee willing to work for the employer). Even if exclusions from one or more employee-benefit plans might be feasible, consider whether the employee might value some kinds of health or retirement benefits enough that she’s willing to accept a lower salary so the employer meets its all-in budget.

Personally, I think this is poor if not incorrect design/completion of AA. Defining a YOS for eligibility has no relevance when a YOS is not a requirement. And you have a further disconnect using hours for eligibility YOS and BIS when eligibility is based on elapsed time. The application of this - someone having to complete a YOS to eligible upon rehire after only having to complete 3 months after initial hire - should be evidence enough that the combination of those provisions is improper and incompatible.

Use the Search feature, with search term "Continental" or "sham divorce".

A good way to prevent sham terminations is to have a wait period on receiving distributions of 30-60 days. Some plans will have an exception to the wait period for those at NRA.

C.B. Zeller, if SCP were used and the amendment went back to 2021, it would be deductible for 2021, I think, if the employer is on extension for its tax return. But if the amendment were made for 2022, i.e., not as a correction, then would not seem to meet the "on account of such taxable year" requirement of 404(a)(6) for 2021.

I think they'd just be on the hook for a THM, then. Whether that's 3 or 5 depends on whether he's in an excluded class of employees, versus just being a participant with a 0% benefit formula on the DB side. If you make him completely ineligible from the DC plan, too, then you owe him nothing, and he still counts in the tests as a zero.

Seems like a facts and circumstances determination.

Asset sale, so the company/plan sponsor continues to exist, just doesn't have any assets (except cash). Unless buy/sell says otherwise, seller still maintains (and has responsibility for) the Plan and it can remain open indefinitely, until the sponsor terminates it.