PEO spin-off to single employer plan

The company has been part of a PEO 401(k) plan since 2016.  The plan has been operating as a safe harbor 401(k) plan.  The company is leaving the PEO effective October 1, 2019 and will spin-off from the PEO 401(k) plan to a single employer plan.  The new plan recordkeeper says it can't accept employee deferrals until November 1 (the company does payroll semi-monthly on the 15th and last day of the month).

Is it preferable to draft the new plan document as a restatement of the existing plan with an initial effective date of 2016 and a restatement date of October 1, 2019?  The new document will have the same provisions as the PEO plan, with certain changes in eligibility and vesting being effective January 1, 2020.  Plan number will be 001. 

Alternatively, is the new document drafted as a successor plan, with an initial effective date of October 1, 2019?  Again, the provisions will be the same as the PEO plan with certain changes effective January 1, 2020.  Since the intent is to continue this as a safe harbor plan, is this option viable? 

The company will be instructed to continue to take deferral contribution deductions from the October 15th payroll even though the remittance to the new recordkeeper will be a little late.

Thinking down the road...If the plan is treated as a restatement, how is Form 5500 completed for 2019?  If we report opening assets of 12/31/18 account balances is this inconsistent with identifying this as a first return?  But, if we report opening assets of zero with a transfer from the PEO plan is this inconsistent with reporting an effective date of 2016?

All input is appreciated.

Thanks.

Did they have a plan prior to 2016 (before the PEO) that merged into the PEO?   If so, you might want to check the plan number---I only say this because we got caught up in an issue with the IRS years ago because 001 had been used prior to the PEO....   We moved out of the PEO at  1/1, so didn't experience your issues....We were a whole new plan.

From the brief description, it seems the PEO is filing as a qualifying single plan and each employer is adopting the PEO MEP under the MEP's EIN & PN.  If so, the employer plan would begin a new plan effective with the ending of participation in the PEO MEP.  Assets transferred therein would be reported as a merger of the PEO MEP assets.  The new plan would have the employer's EIN and a PN based on any other plans (001, 002, 003, etc) that may exist or have existed previously under the EIN.  That is, as hr for me indicates, you shouldn't reuse a previously used PN for the same EIN.  Your plan effective date on the new single employer plan shouldn't be dependent upon when assets transfer -- the effective date may be earlier.

Do they want to stay safe harbor for 2019?  You haven't mentioned a 410(b)(6)(C) transaction, so they can't terminate a SH plan with a short final year and remain safe harbor.  1.401(k)-3(e)(4).  The new plan would be a successor plan, so it can't have a short initial plan year. 1.401(k)-3(e)(2). Unfortunately, there isn't any guidance on spin-offs or mergers of safe harbor plans.  The couple of times we've had this come up, I did the new document as a restatement of their existing plan, effective the first day of the current plan year and mirrored the existing safe harbor provisions, so they remained in effect for the full 12 month plan year.