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Does the Plan Document currently not allow for match or has the company simply not made matching contributions in the past? Because I think the two may lead to different results. If the plan currently allows for a discretionary match but they haven't made one, the plan probably already has a testing method (current or prior) and I don't think you can used the assumed 3% prior year rule. If the plan doesn't currently allow for matching contributions and you are amending that in with the after tax, then I agree if you elect prior year testing, the first year NHCE ACP is assumed to be 3%.

110% issue is within the 401(a)(4) regs, so one would think it would not be applicable to H&W situation. But, I think the IRS insisted that the language be included in the pre-approved plan documents, so I believe all "known" PD vendors have that language in their PD. So, it becomes an operational issue. Proceed at your own risk.

Had a situation just like this not too long ago and our actuary insisted that the 110% rule still applies.

What if it were two unrelated 50/50 partners? Would it be fair or permissible to allow one owner to cash out 100% and leave the other owner under funded? Why not terminate and have wife establish new DBP if desired? Or, if not too far short of 110%, pre-fund to increase the assets and get there.

I agree. If all HCEs, they can do whatever they want, assuming no 415 issues. This also assumes that the plan has never benefit any NHCEs and there are no NHCEs who are being excluded from the plan.

Thank you both for your comments. The A Plan DOES exclude compensation prior to participation, so it simplifies this particular situation. The B Plan is going to be terminated, as far as I know, effective 12/31/25. There was originally some talk between the employers and their advisors abut merging the plans, but they decided against that.

You might check out this old thread that seems close to your fact pattern and look at the reg that is quoted in the last post, but it's an older posts and some cites may have changed. Treas. Reg. Section 1.404-3(a)

No, because part of the 80-120 rule is that if you filed as a small plan last year you can file as a small plan this year. Its a new plan, you didn't file last year. The determining factor for a new plan is the number of participants with a balance at EOY.