Safe harbor plan, disaggregation

Company A and Company B are related employers (part of a controlled group). Company A sponsors non-safe harbor 401(k) plan. Company B is a participating employer under Company A plan. Company A and Company B can pass 410(b) coverage, separately. Can Company A and Company B be disaggregated for purposes of ADP/ACP testing? Can Company B adopt safe harbor 401(k) plan provisions with respect to Company B employees only?

I think this is permissible if Company A and Company B sponsor separate plans. Can we get to the same conclusion if there is only one plan?

Thanks.

On 8/18/2022 at 2:21 PM, JRN said:

Can Company A and Company B be disaggregated for purposes of ADP/ACP testing?

No. See Treas. Reg. 1.401(k)-1(b)(4)(iv)(B).

On 8/18/2022 at 2:21 PM, JRN said:

Can Company B adopt safe harbor 401(k) plan provisions with respect to Company B employees only?

No. Can't restructure with safe harbor, either.

Need to adopt separate plans.

Thanks Luke.