Merging 2 Safe Harbor Plans mid year

[austin3515]

Recent acquisition (last year or two).  Both plans are calendar year.

Scenario A

Both plans have the exact same match formula and eligibility.  Can I merge these plans together mid-year (Say May 1 2020)?  Eligibility would be expanded to additional people after the merger because the surving plan has a more liberal eligibility policy.

Scenario B

One plan with a dollar for dollar match on the first 4%, would merge into a plan with the basic safe harbor match.  I assume this would be a reduction in match?

I know Notice 2016-16 solicits comments on the need for additional guidance, but what are we to do in the interim?  I feel like Scenario A is doable but probably not B.

I saw Tom Poje had posted the idea of changing the plan year ends to create a short plan year, but I just don't think that is realistic in this case.

[Luke Bailey]

austin3515, in Scenario B was your idea that after the merger you would run the merged plan with the 4% dollar for dollar for all participants through end of year?

[austin3515]

No - the "big" plan uses the basic match.  So my question was really "Does everyone agree this does not work" (I don;t think it does).

[Luke Bailey]

3 minutes ago, austin3515 said:

No - the "big" plan uses the basic match.  So my question was really "Does everyone agree this does not work" (I don;t think it does).

Right. After the merger, you have one plan . The regs require that all NHCEs get the same safe harbor contribution, and you probably can't reduce one group to match the other.