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I think this seems reasonable. Though if you freeze Company B, you should be able to merge it into Company A at any time in 2024 no need to wait until 2025. I think you'll want to get the SH match notice out to Company B ASAP and document why it isn't be distributed 30 days before the plan year. Document why you think the notice was given in a a reasonable time and let sponsor A make the call since the IRS could take a different position based on facts and circumstance. I think to the extent that most of the employees in Company B contribute in 2024 and get the full SH Match the better your argument that the notice was reasonable and timely is likely to be accepted by the IRS should the issue come up.

Then I don't see the issue here. You're not even having to do an -11g amendment.

Yeah I agree with that. As you noted, a QMCSO/NMSN can't require the plan to provide a benefit it doesn't otherwise provide. I don't think a QMCSO/NSMN can require the employee to make a payroll salary reduction contribution of any amount toward the underlying individual policy. That individual policy is not an ERISA group health plan so it's not subject to these rules. The ICHRA rules have a whole section spelling that out. And since the ICHRA itself cannot have employee contributions (as with any HRA), I don't see any employee skin in the game here. That's what makes this so interesting/different from a standard GHP situation.

3-year average compensation may be taken from any consecutive period, pre-plan, post-freeze. Likewise for Years of Service. Participation is credited service for which the person accrues (or would otherwise accrue) a benefit - so no for pre-plan and no for post-freeze. See the regulations.

Thank you Bill, I agree. Also, no -11g amendment needed. FWIW, the terminated participant is 100% vested and the employer really cares for the participant - wants to boost the contribution anyhow! Happy Holidays!