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I don't see a problem with that.

Assuming the receptionist is a NHCE, then go ahead and do an amendment to give her 100% vesting. If you are using a preapproved "fill-in-the-blank" style document it probably has a spot for special vesting provisions. You can enter something like "Jane Smith is 100% vested as of 6/8/2022" or "Receptionists who were hired in 2018 are 100% vested as of 6/8/2022" or whatever language will accomplish the desired result, as long as it is definitely determinable and not subject to employer discretion. Do not attempt to get "cute" - one of the requirements to be eligible for self-correction under EPCRS is that the plan must have processes and procedures in place to reasonably promote compliance. If you are knowingly and willfully flouting the plan document then you are not promoting compliance.

Assuming the plan document and applicable law permits the interim valuation, I would provide everyone with statements to let them know that their accounts had been revalued based on a special interim valuation. I would explain to them why that was permitted under the plan document, etc. There are lots of reasons for this, e.g. employees and former employees may talk to each other and you don't want them to imagine things that the two groups were treated differently. Also, the separateds above the cashout limit might not want to take distributions if they see the new values are, so you want to send everyone their statements before you process their distribution elections. Also, the continuing employees may think twice about quitting once they see their reduced balances. Always dial in the law of unintended consequences.

The sponsor might want to keep the money in the (a) plan for various reasons, among them paternalism.

So if you do not count that overlap at year-end, make sure you include any prior year overlap that hit in the beginning of the year. Also, if vacation pay was for the current year then those hours should also be counted for the current year - plan's statutory definition of Hour of Service should be clear on that.

I wanted to also add that mandatory HSA contributions could be administratively problematic for the employer since there's a dollar limit on the HSA contributions. Personal example: as part of my benefits package, my employer contributes up to the HSA limit for family coverage. My spouse who is not covered by my employer, but his own employer's coverage, signed up for an HSA and "unknowingly" received a minimal contribution to his HSA account (-he didn't bother to read the fine print). It was a pain trying to correct the overage.

I found this in DOL Reg. 2530.200-2(c): (4) In the case of hours of service to be credited to an employee in connection with a period of no more than 31 days which extends beyond one computation period, all such hours of service may be credited to the first computation period or the second computation period. Crediting of hours of service under this paragraph must be done consistently with respect to all employees within the same job classifications, reasonably defined. Basically I was looking to see whether the hours have to be specifically performed in the actual year, versus what's on the payroll records. Typically I would have asked a sponsor to lock in on "the actual 12 months" (such as hitting 1000 in their first 12 months, or double-checking whether to credit vesting for someone who came over on a census file with 998), but perhaps that's not absolutely necessary as long as it's done consistently.

It's a good point, jsample, but I don't think it really changes the earlier answers. Putting aside skullduggery such as that the receptionist threatened legal action over something and this is a way to keep them quiet (which could be a prohibited transaction as a use of plan assets by a fiduciary), It's the same as if the employer amended the plan to say that the non-highly compensated employees in building A get 1% and those in building B get 2% for the year. The only discrimination that is not permitted is in favor of HCEs. If this sort of amendment occurs frequently enough, you could have an issue of whether the plan is being administered in accordance with its terms, even with an amendment, but that issue is more threatened than actually raised.

They are treated separately for purposes of the 415(c) limits. Of course, deferrals under 401(k) and 403(b) plans of separate employers are aggregated for purposes of the 402(g) limits. 457(b) plans are subject to separate limits, regardless of whether it is one employer or more than one. (And of course, a state or local government can't have a 401(k) at all unless it is a grandfathered 401(k).)

... and do this before paying the distribution.