stock sale and transitional relief

We were just told yesterday that effective 12/31/20 Company M sold out to Company S in a stock sale such that M is a wholly-owned subsidiary of S.  We are the tpa for M's plan (401(k), safe harbor, profit sharing), and S's goal is to terminate M's plan in 2021.

M's employees are still being treated as belonging to a different entity, and are still deferring into M's plan.

Obviously, we want to take advantage of the transitional relief rules so that we don't have to deal with S for testing in 2020 or 2021.  This brings up a few questions:

1. Can M as a corporate entity be the plan sponsor of M's plan post-12/31/20?
2. Can the trustees of M's plan (who were the former owners of M) stay on as trustees of M's plan?  I don't see why not, though they may not particularly want to.

If we amend, we lose the transitional relief, so I'm wary of that.

It's funny - the articles about this topic all seem to be written from the point of view of the purchaser, not the seller.  Maybe I should be dumping this all on S and telling them to have their TPA figure this out!  Oh, wait - they don't really have one; they use a bundled low-cost product, so they have no one to give them any advice (except their attorney, who I'm sure charges much more per hour than I do!).

Thanks.

1. Yes, as long as M remains a separate entity (i.e., it was not merged into S after closing).

2. Yes, but generally it's recommended to appoint someone on the buyer's side if the sellers will not remain involved with M after closing.

Also, M's plan cannot be terminated in 2021; if not maintained separately, it would have to be merged into S's plan to avoid successor plan issues.

+1 to EBEC's post.

3 hours ago, EBECatty said:

Also, M's plan cannot be terminated in 2021; if not maintained separately, it would have to be merged into S's plan to avoid successor plan issues.

EBECatty makes the key point. If seller wanted to terminate the plan to allow distributions to seller employees on account of plan termination, the plan should have been terminated immediately prior to the effective date of the transaction. Because the seller plan was not terminated, the only real choice to "get rid" of buyer's plan is a merger. 

Thanks, all.  @EBECatty, isn't appointing a new trustee an amendment that will take the plan out of the transitional relief period?

No, the "no amendment" rule is not that broad. It only prohibits changing coverage under the plan (i.e., if you make an amendment that substantially changes coverage, you lose the transition rule). Changing the trustee will not impact.