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I don't think a resolution is enough - pre-SECURE would you allow a new plan for 2021 with 2021 resolution but 2022 plan adoption date? Also, resolutions can be and do get rescinded all the time before execution of the action items. I do not think a resolution creates a plan and I don't see how you can have a deferral election for a plan that does not yet exist. I would also recommend against.

You can spin off a plan - that is, split a plan into two or more pieces, regardless of any changes or lack thereof to the sponsoring employer. The new plan, for the division being sold can then be merged into the buyer's plan. However, if those employees are terminated from B, you can distribute according to elections or possibly do a trustee to trustee transfer w/o the administrative hassle of a spin-off merger. Also think about vesting for these employees, which might need coordinated effort/agreement between buyer and seller if full vesting is desired or non-vested balances are to be transferred as well, and then there's the possible partial termination. I'm sure others in this forum who deal with 401(k)s more than I may have further insights.

Nate S, In addition to the points you have raised about what has to be preserved, you also have to preserve the optional forms of distribution available under B's plan (which can be limited to the amounts being spun off into A's plan). The IRS regs do provide plenty of options for validly eliminating some of these via amendment without running afoul of the anti-cutback rule.

Does your opinion change if the employee was just hired, so he is a NHCE for the current year, but his salary is 400,000 and he will be a HCE next year.

My HC guy - got a guy for everything! - says that although the underlying HDPD is an ERISA benefit the HSA is not, it is an individual's account (like an IRA) that is not employer sponsored and therefore he does not think that an employer can mandate employee contributions thereto.

Agreed, but I would do currently as a planned amendment rather than later as a correction - just my personal preference, which also ensures you changed plan eligibility for this person before they became an HCE if they do subsequently become one.

Justatester - a quick observation FWIW - when a DC plan is terminated on a date other than the last day of the limitation year, under 1.415(j)-1(d)(3), there is deemed change of the limitation year - in this case, a short limitation year is created. So the fact that the 415 limit was prorated seems correct to me.

Yes, you can do it anytime.

CuseFan and B's TPA are correct, a spin-off can occur for any or no reason whatsoever; you just have to have a definitely determinable group of employees, easily satisfied by the divisional group dealt with here. B's Plan will execute the spin-off and resolution, A's will execute the merger and resolution. Just have to ensure that vested account balances are preserved and any joint & survivor benefits are protected. Otherwise its an administratively simple transfer. A will need to make sure their Plan will accept the transfer of loans if any.

Yes, this is actually the recommended correction for early entry issues. It is always allowed for NHCE's; if an HCE is involved then the amendment must be non-discriminatory, to the extent there are affected NHCE'S. For example, if the HCE is the only ineligible, then no issue with bringing him in early. But, if you have ineligible NHCEs who were hired before the HCE, or will attain similar terms of service during the plan year, then you would have to bring them in too.

Maybe, but that would imply it's tied to payroll, and again that would be on the basis of compensation paid, so it shouldn't be possible to exceed. @justatester can you help us with some details?

Assume currently an NHCE. I think you can do, but why amend twice? Why not amend once to say, "notwithstanding, employee X will enter the plan effective MM/DD/CCYY" or something similar, or employees hired on A or between B and C?

@ombskidthey have to make the deferral election by 12/31 of the year for which the election applies.

Can't do 401k retroactively.