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BE CAREFUL - the "same desk rule" wasn't eliminated. The change allows plans to include "severance from employment" as a distributable event in their plan document. You'll need to check the plan document to see if "severance from employment" is a distributable event in the old plan; if not, the same desk rule is in full force unless the plan is amended. I work with a large plan that did not amend for severance from employment, and it's a mess when subsidiaries are sold-off and the buyer doesn't want to spin-off that portion of the assets. I agree with masteff that you likely have a controlled group issue affecting the ability for participants to take distributions. It appears that the two companies are part of the same controlled group and that employees have essentially transferred employment within the controlled group. Generally, this is not a distributable event. Additionally, if the two plans in question are 401(k) plans, there might be some issues with terminating the old 401(k) and starting a new 401(k) within 12 months. The best approach might be to merge the old plan into the new plan or alternatively, freeze the old plan and pay folks out as they terminate employment from the controlled group.

You'll find the answer to your question in Treas. Reg. 1.401(k)-3©(4) Limitation on HCE matching contributions which says "The safe harbor matching contribution requirement of this paragraph © is not satisfied if the ratio of matching contributions made on account of an HCE's elective contributions under the cash or deferred arrangement for a plan year to those elective contributions is greater than the ratio of matching contributions to elective contributions that would apply with respect to any eligible NHCE with elective contributions at the same percentage of safe harbor compensation." In plain English - if an HCE gets a higher matching-to-deferrals ratio than ANY NHCE who defers the same percentage of compensation, then the plan doesn't meet the safe harbor matching requirement. If you have a participant who meets the one-month deferral eligibilty requirement, makes deferrals and doesn't get a match, then their ratio of matching contributions to deferrals is 0%. That would then be the highest ratio of matching contributions to deferrals that all HCEs could receive and still meet the safe harbor requirement. If the NHCE becomes eligible for matching contributions mid-year and only receives contributions from that point on (but deferred the entire year), then the most any HCE could receive is the same ratio as that NHCE. In other words, a plan could presumably have a one month eligiblity requirement for deferrals and one year requirement for match only if HCEs are excluded (by plan provision) from receiving a matching contribution and/or the matching contribution for HCEs is tied to the lowest matching ratio of any NHCE.