Merger of 401(k) Plans Mid-Year

[Guest abrandw]

I am merging a 401(k) plan sponsored by one member of a controlled group (Plan #1) into another 401(k) plan within the group (Plan #2). The merger is occurring mid-year, and Plan #2 will be the plan surviving the merger. Certain participants in Plan #1 (which does not have a matching contribution) have already reached their 402(g) limit for the year. Can we provide in Plan #2 for matching contributions on deferrals made to Plan #1? Matching contributions in Plan #2 are made on an annual basis. The plans are not aggregated for ADP/ACP testing purposes. Regulations 1.401(m)-1(f)(12) appears to say that a match can be made with respect to deferrals made to another qualified plan maintained by the "employer." The two employers in this case are an "employer" for purposes of Code Section 414(b). Subparagraph (ii) of that regulation, by negative implication, supports this interpretation.