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And a pox on all the M&A attorneys that still don't bring in the TPA to get these things done timely.

Well, the position of the IRS is that the existing formula gives the participants a "protected allocable share" (i.e. IF an allocation is made for 2024, it must be pro-rata) and that such an amendment couldn't be implemented until 2025. I've seen arguments that the IRS' position is inaccurate, but I wouldn't want to fight that battle

Does this rule help support an interpretation? Special rule regarding severance from employment. For purposes of this section, severance from employment occurs on any date on which an employee ceases to be an employee of an eligible employer, even though the employee may continue to be employed either by another entity that is treated as the same employer where either that other entity is not an entity that can be an eligible employer (such as transferring from a section 501(c)(3) organization to a for-profit subsidiary of the section 501(c)(3) organization) or in a capacity that is not employment with an eligible employer (for example, ceasing to be an employee performing services for a public school but continuing to work for the same State employer). Thus, this paragraph (h) does not apply if an employee transfers from one section 501(c)(3) organization to another section 501(c)(3) organization that is treated as the same employer or if an employee transfers from one public school to another public school of the same State employer. 26 C.F.R. § 1.403(b)-6(h) https://www.ecfr.gov/current/title-26/part-1/section-1.403(b)-6#p-1.403(b)-6(h)

@MD-Benefits Guy you are correct to ask questions because the when and how the acquisition is done can have a significant impact on your current plan's participants. First and foremost, pay attention to @david rigby's comment about whether the buyer will acquire all of the stock of your company (the seller) or the buyer will acquire all of the assets of your company (the seller). If this is a stock transaction, then upon closing the buyer in control of the plan. If this is an asset transaction, then upon closing the buyer is not in control of the plan and the seller continues to exist after closing and the seller can decide the fate of the plan. You do not say if the buyer has an existing 401(k) plan or, if not, intends to adopt a 401(k) plan. If yes, there are rules about whether the buyer's 401(k) plan is considered a successor plan to a seller's plan that is terminated after closing, and these rules can be particularly onerous after a stock transaction. The more common scenario for handling an acquired seller's plan is for the seller's plan to be merged into the buyer's plan. A plan merger is different from a plan termination. If the buyer expects to have an existing 401(k) plan operating alongside the seller's plan, each plan's document should be carefully reviewed to address potential unintended consequences. Each plan's provisions regarding eligibility, excludable employees, plan compensation, contributions (including answering your question about true-ups), vesting, and the safe harbor features should state clearly what applies to all or each subgroup of employees. This review definitely should be done before closing a stock transaction. Another note to keep in mind is that plans are terminated by adopting an amendment to terminate the plan. In addition to setting the termination date and the plan year end date, the termination amendment can be used to address the questions you raised in your original post. Mergers and acquisitions, handled properly, can go smoothly with few surprises. Handled improperly, they can lead to bad feelings and costly compliance issues. Hopefully, both the buyer and seller in this transaction have experience with what needs to be done with existing plans of both the buyer and seller.

Yes, so would I.

Agreed. If the plan had last day requirements, I would argue the other way.

Bringing this back to the present reality, LTPTEs are not the best example because they were enacted as part of SECURE 1.0. SECURE 2.0 merely reduced the number of consecutive years needed to become LTPTEs from 3 to 2 and extended their application to 403(b) plans. Better examples would be PLESAs or the mandatory auto enrollment rule.

You have until 11/30/2024 to make the plan SHNE for 2024 with a 3% contribution. From 12/1/2024 until 12/31/2025, you can make the plan SHNE for 2024 with a 4% contribution.