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Carryover of Deferral Elections to QACA? Uniformity Requirement an issue?


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Company A acquired Company B in stock acquisition in 2021.  Each entity sponsors its own 401(k) plan with calendar year plan year. Company A's plan is a QACA safe harbor with a 3% non-elective contribution. Company B is not safe harbor.

Company A wants to freeze Company B's plan as of 12/31/22 (end of 410(b)(6)(C) transition period), add Company B as participating employer under Company A plan as of 1/1/23, and merge Company B's plan into Company A's plan sometime in 2023. (No bandwidth to do a year-end plan merger.)

Company A wishes to carryover the deferral elections under Company B's plan to Company A plan as of 1/1/2023.

I am concerned that this doesn't satisfy the uniformity requirement under QACAs/EACAs (that eligible employees be automatically enrolled at a uniform percentage of compensation).

1. Am I being too conservative? Would such carryover be okay for a QACA?

2. Would your opinion differ if the plans were merging as of 1/1/2023, given that the merged plan would be a continuation of both Company A and Company B plans?

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