Short year SIMPLE replacement - Self-employed individuals

Business has a SIMPLE IRA program, follows the rules to terminate it mid-year and replace with a qualified 401(k) plan. 

Partners are self-employed, do not receive W-2s, they do receive self-employment earned income from the business. 

Would you pro-rate their compensation for the year? to apply a portion of it to the SIMPLE and a portion to the 401(k) plan? 

Given that compensation occurs as of the last day of the year, that doesn't seem the right answer to me. 
Yes, deferrals can occur throughout the year, the IRS made that clear somewhere along the way, but end of year actual comp has to be sufficient to support it. 

If a person can make their deferral election all the way up until the last date of the year, because that's when their compensation is deemed to occur, then I would think the SIMPLE portion of the year would have $0 compensation and all of the compensation would be for the 401(k) plan. 

Related question - employer with self-employed earned income folks has a 401(k) plan, plan terminates mid-year. Since it terminated mid-year do the SE Income folks have compensation for plan purposes for that period, such that they could have employer contributions, deferrals, safe harbor etc? 

If the answer to those to scenarios are different, why? 

22 minutes ago, justanotheradmin said:

I would think the SIMPLE portion of the year would have $0 compensation and all of the compensation would be for the 401(k) plan

I would buy that, but remember your deferral limit is prorated for number of days under each type of plan and applied to each plan. I don't know the answer to your other question.

Treasury Reg. 1.401(k)-1(a)(6)(iii) states that “a partner's compensation is deemed currently available on the last day of the partnership taxable year” and therefore, the partner must make the cash-or-deferred election no later than such date. The reason for this is because the partner's earned income is likely not yet known. But, this provisions relates specifically to the timing for making the 401(k) election.

It does not say that all of a partner's compensation is earned on that date. The very next paragraph-- Treasury Reg. §1.401(k)-1(a)(6)(iv) states that “the income of a self-employed individual for a taxable year constitutes payment for services earned during that year.”

Therefore,I don't think your conclusion necessarily holds. 

Understood, and that makes sense that it is EARNED as services are performed.

But that could be problematic in each question/situation @justanotheradmin posed. A plan to which the partner contributes (or wants to contribute) terminates before the end of the partner's tax year, on what basis do such contributions, whether salary deferrals or employer contributions get determined? Do you wait until YE and prorate their income for the partial year, make the contribution(s) and then the final termination distributions?