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Company B is purchasing 100% of the assets of Company A. All employees of Company A will terminate effective July 15. Company A's 401(k) Plan is terminating. Owners of Company A would like to make a discretionary profit sharing contribution to Company A 401(k) Plan for this final plan year. Even though the asset sale will occur on 7/15 and all employees/owners will terminate employment effective 7/15, can Company A elect to wait until 12/31 to formally adopt a resolution to terminate the plan, thus avoiding a reduction in the compensation limit, 415 limit, 1,000hrs allocation service requirement for PS, etc...? As an added benefit, the employer would not have to provide top heavy minimum contributions since the limitation year would be extended to 12/31. While I cannot find anything suggesting the plan is deemed terminated or must terminate as of the transaction date, it doesn't seem right that an employer could manipulate the staff funding requirements by postponing a formal plan termination.

Company A is a professional corporation with a Safe Harbor 401k Plan. The son of Company A's owner is interested in buying the practice via an asset sale, mid-year, and he would like to acquire the 401kSH Plan with the purchase, as all employees will continue on with the "new company" or successor employer. It is my understanding the transfer of the Plan should be addressed in the buy / sell agreement, including service to be credited, contributions/deductions for year of purchase. Questions/Concerns: With it being a "401k Safe Harbor" plan is there any problem with the new company amending the Plan to reflect the successor Plan Sponsor's Name, EIN mid-year, coincident with the buy/sell? The new company does not intend to "change" any of the Plan's provisions -- simply wants to become the successor plan sponsor. I am not familiar with any "mid-year" Safe Harbor Notice provisions. Other than providing an SMM to participants, is there any other Notice requirement? My concern here is the SHMatch -- Company A will fund the SHM for all payroll through Company A; the successor Company will fund the SHM for all of its payroll -- is this considered an impermissible change mid-year. They do not anticipate a PS contribution for this year. Assuming the new company is permitted to Amend the Plan mid-year to reflect its successor sponsorship, Name and EIN (no other changes are intended), is there anything further necessary to affect this transfer of Plan from old sponsor to new sponsor? Thank you