Contingent Benefit Rule in Terminated Plan

Say you have the following scenario:

Plan sponsor is being acquired mid-year and terminates its 401(k) plan, say, November 1. For administrative/payroll reasons, employees of the acquired company will not participate in the buyer's 401(k) plan until January 1. Plan has a safe harbor matching contribution. The plan sponsor wants to make the participants whole for missed matching contributions during the two-month gap, but profit-sharing allocation provisions would not allow a PS contribution targeting only people who deferred.

If the plan sponsor paid the participants a bonus (outside the plan) in the amount of matching contribution they would have received for the rest of the year at their deferral rate in effect on the date of plan termination, does this violate the contingent benefit rule?

It arguably does because the cash bonus is contingent on the employee having had a deferral election in place at plan termination.

What if the bonus is paid after the plan is already terminated? No one has any further deferral right or election, so it's hard to make something "contingent on" an election that no longer exists. 

If it does violate the contingent benefit rule, what would be a correction?

Appreciate any thoughts. 

EBECatty, I think the bonus would arguably have to be both communicated and paid only after plan termination. Otherwise, the bonus paid, say, in December, would be contingent for some on elections made, e.g., in September or October based on knowledge that the bonus would be paid based on the election in place as of October 31.

Arguably, it should be OK in all events because does not seem to involve the purpose of the anti-conditioning rule, but who knows. Technically, I think the issue you raised is plausible, so would play it safe. If the bonus is not announced until after the plan is terminated, harder to argue that conditioned on the election. Of course, you may have some disgruntled employees.