Eligibility on change in Organization structure

[Lawrence]

Sole proprietor has a Safe Harbor 401k plan  and has himself and the two other employees participating.

Employer forms a C Corp and starts a new Safe Harbor 401k plan, terminating the Sole Proprietorship and Sole Prop 401k plan and transferring all employees and balances to the Corp 401k plan.

Employees are doing the same jobs as before. "Same Desk"

Is my understanding correct that service with Sole Prop plan transfers to the Corp plan?

 

[mming]

The plan document can be drafted/amended to specify that the sole prop can be named as a predecessor employer, and that service with the predecessor employer will be recognized.  This is an option that even most prototype docs offer.