Merger of non-safe harbor 401(k) plan into safe harbor 401(k) plan

[Guest PGH.ERISA]

Client has a safe harbor 401(k) plan and acquired another entity with a non-safe harbor 401(k) plan. Client wants to freeze the acquired plan and put the acquired company's employees in the client's plan in a couple of months, and then merge the acquired plan into the client's plan later this year. The client's recordkeeper says no, however, as it claims that it can only merge the frozen plan into the client's safe harbor plan as of the end of a plan year. It has not provided any authority for this, however. Is anyone aware of authority that would bar a mid-year merger?

[Tom Poje]

what? You've never read 1.401(k)-5 Special rules for mergers, acquisitions and similar events.

I will take the time and trouble to reproduce it for you:

"Reserved"

..........................

ok, thats it. there are no rules. no suggestions. no nothing.

I'd say the comments you received follow a safe conservative view if you wish to guarantee maintaining safe harbor status for the one group of employees.

If you don't merge, how do you test? you can't aggregate a safe harbor with a non safe harbor.

if you merge, what do you do with the deferrals from the first half of the year?

there are simply no guidelines. sorry