"We have an LLC taxed as an S Corp with a PS plan -- no 401k feature. 2 year wait with dual entry next. PS only -- everyone in their own group. Seven 2025 participants. They haven't made a PS contribution in a number of years but would like to for 2025 (on extension). We just found out that they installed a 401k plan effective 1/1/2024 with their payroll provider (sigh). It has a 3 month wait with 1st of the month entry. EACA with 4% SHM (calced each payroll). It has a discretionary pro rata PS with no allocation conditions. There are 4 additional participants in this plan that do not have 2 YOS. The PS only plan is top heavy. I don't have the 12/31/2024 balances of the 401k plan yet, but I'm assuming it will still be top heavy. They want to maximize a PS contribution the PS only plan for 2025.

"Can this be done? If so I assume they have to be tested together, but I'm not sure what that looks like. Someone from my organization said the PS formula in the 401k plan supersedes the groups formula in the older plan and we have to use the pro rata formula, but I don't think that is true since they are separate plans. I think the problem is can it be tested with the different eligibility provisions. Since the THM is needed -- we can exclude the non statutory participants from the TH I think, but what about those who have over 1 YOS, but not 2?"

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"A company that only employs the owner sponsors a DB plan and wants to terminate it and start up a new 401k plan because the DB is getting very close to becoming overfunded. Perhaps I'm confusing two different topics, but I seem to recall that there's a rule where you have to wait at least one year in some instances before you can start up another plan. I believe the purpose of the rule was to prevent an owner from effectively taking an inservice distribution prior to age 62 (i.e., the distribution resulting from the DB terminating) while continuing to accrue additional benefits via a new 401k plan. I've found references to sponsors terminating DB plans and immediately starting up 401ks without such an issue mentioned, so my question is under what circumstances do you have to wait a year before starting up a new plan?"