Safe harbor 401(k) sponsor acquires a SIMPLE IRA sponsor

We have a client ABC with a SH 401(k) plan.  I just received word they are acquiring company XYZ that sponsors a SIMPLE IRA.  It's an assets purchase which will take place 9/30/2024.

I don't know if ABC wants to recognize service worked with XYZ in meeting eligibility.  I think that is likely.  

So, the 402(g) deferral limit would apply as combined for any SIMPLE deferrals and deferrals under the 401(k) plan for 2024. ABC only funds a 3% non-elective SH.  I'm guessing XYZ funds the SIMPLE match.  

If we sweep into the ABC plan XYZ employees who meet ABC eligibility, would the 401(k) funding be as simple as providing the 3% SH for ABC 12-months and former XYZ employees for 3-months?

I believe there is some flexibility in testing in the case of acquisitions.

Thank you!!

If it is an asset purchase then yes it sounds like ABC would retain the SIMPLE-IRA and any funding obligations for 2024.

Should XYZ grant service with ABC for eligibility then yes the folks who enter would get a 3% contribution for their pay with XYZ.

If any employees exceed the 402(g) limit because of participation it what is essentially 2 unrelated plans (at least in the IRS eyes) then they would need to request a refund under one of the plans and complete it before 4/15/25.