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Safe harbor plan and cessation of some participating employers


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I have a safe harbor 401k plan using the safe harbor basic match formula. This plan has a few related employers (subsidiaries) that are participating via Participation Agreements. It appears that a couple of these employers will be sold mid-year, via a stock sale/change in ownership rather than an asset sale. My understanding is that this will create safe harbor problems and the only way to maintain safe harbor status for the plan is for each entity to spin out into its own mirror safe harbor plan. If correct and assuming we do not want to create new plans, would an option be to terminate/suspend the safe harbor mid year and convert to ADP/ACP testing - the plan is to continue the same match as a non-safe harbor match. The reasoning is that is will be easier to remove the participating employers. And as FYI - based on our projected testing, the plan will pass ADP and ACP anyways. Any thoughts? Thank y ou!

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