DC 415 limit with potential short plan year

We have a client selling June 30.  Employee payroll will stop at that point.  The plan amendment may say the termination date is Dec 31, 2024.  Owner wages after June 30 would be eligible for plan contributions and the 415 limit would not be prorated.  However if they amend to freeze contributions June 30, I assume the 415 limit is cut in half even though the plan will have a full 12-month 5500 filing assuming the plan is not liquidated until December which is likely.

Also this is a safe harbor nonelective plan.  I believe a change in the business such as this allows safe harbor treatment for the final short year? 

Thank you for your comments.

I'd have to go back and check the IRS notice that covered this but I think you can terminate or merge out due to business transaction I don't think it mentions anything about a freeze so I think the safer course would be termination as of 6/30 (date of the business transaction) or keep the plan open through 12/31 with the owner as only active participant. And you don't state but keeping the option to close terminate after the transaction makes this look like an asset sale and not a stock sale.

Termination generally creates a short plan year with prorated limits, keeping it open gives you the full year limits on comp and 415.

Also check on how your limitation year is defined in your termination amendment. 

Lastly, if you do decide you want to freeze, I do not believe freezing creates a situation where you are required to prorate limits in and of itself, in that case I think you still have a full plan year and get the full 401(a)(17) and 415 limits. If there is some guidance I'm missing in that area I'd love to get a citation so I can squirrel it away for future reference.