replacement plan qualification

if a DBP terminated in 2023 with 4 active employees (2 owners and 2 staffs) in 2023 and the sponsor wants to move the excess asset to the 401k plan to avoid excess tax, however, both staffs (one is HCE, another is NHCE) terminated in 2024, the NHCE needs to get GW so she/he needs to be benefiting in 2024 xtest, what about the HCE? he doesn't have any required contribution (GW or TH). Also, I find the following language from ERISA Outline Book, in this case, he doesn't need to be benefiting in 2024 in order for the 401(k) plan to be qualified as a replacement plan (95% active participants), right? Thank you in advance!

5.a.3) Restrictions on allocations to HCEs. Pursuant to IRC §4980(d)(4)(A), an amount allocated from the suspense account may not result in prohibited discrimination under IRC §401(a)(4). Thus, if the employer restricts allocations to HCEs who were active participants in the terminated defined benefit plan, such restrictions will not cause the plan to fail to satisfy the 95% requirement described in 5.a. above. See PLR 201147032 and PLR 201221059.

I think you're OK. Plus, as of your plan termination date (2023) you were at 100% covered by QRP. Future employee terminations don't affect that, otherwise you'd be dead in the water. 

You don't say what the excess is but are you sure it can all be allocated in 7 years?

18 hours ago, CuseFan said:

I think you're OK. Plus, as of your plan termination date (2023) you were at 100% covered by QRP. Future employee terminations don't affect that, otherwise you'd be dead in the water. 

You don't say what the excess is but are you sure it can all be allocated in 7 years?

Yes, the excess is not that large and can be fully allocated in 2024. Thank you Kenneth!