Walter

Company B has never had a plan.

So if Company B terminated the plan and started a new plan effective 01/01/2020 would that solve the problem? I agree about the ADP test but that should not be a problem but would be monitored.

We have a client, Company A, who sponsored a safe harbor match 401(k) plan. The plan is top heavy for 2019. On 10/01/2019 Company A sold all Company A's assets to Company B. All the owners of Company A became employees of Company B and have no ownership in Company B. Effective with the assets sale on 10/01/2019, Company B took over sponsorship of Company A's 401(k) plan. Going into 2020 Company B would like to amend eligibility to be immediate upon date of hire for salary deferrals but still require 1 year of service to receive the safe harbor match. Would the plan be considered top heavy for 2020 requiring that participants eligible to defer but not eligible for the safe harbor match be given a top heavy benefit?

Yes husband is a realtor and wife is an attorney. The two entities do not share anything. Everything is completely separate. They have minor children. The wife has 4 employees and sponsors a 401(k) plan. The employees will receive enough profit sharing contribution to pass 410(b) and 401(a)(4) as a controlled group.

Hi Lou, I read the link and here is what they wrote "50 employees - each separate line of business must have at least 50 employees (does not apply in determining if a defined benefit satisfies the minimum participation requirements on a separate line of business basis". It's the "does not apply" part I'm looking at. I have no problem with 410(b) coverage. It's 401(a)(26) I'm trying to get around.

There is an exception to the 50 employee rule under IRC 401(a)(26)(G). So would I be correct in think that I can use the QSLOB election just for 401(a)(26) testing of the 1 participant DB plan?

Thanks Ken, my understanding when applying the minimum participation test under 401(a)(26) on a QSLOB basis, a separate line of business may be treated as a QSLOB even though it does not satisfy the 50-employee requirement. So if the employer makes the election to use QSLOB testing would they not only have to test using the employee of the SLOB, i.e. the realtor LLC (of which there is only 1 employee)?

I agree that it is a controlled group especially since there are minor children and I'm not having a issue with 410(b) or 401(a)(4). It's the 401(a)(26) participation test I'm trying to get around. It's my understanding that there is an exception to the 50 employee requirement for a DB plan

We have a realtor who is an LLC and files as a sub-S. Spouse is an attorney, PA with 5 employees, Would the realtor LLC be able to qualify as a SLOB and adopt a defined benefit plan?