Company A has maintained a safe-harbor 401(k) for many years but sold its assets in March 2023 to Company B. All employees then became employees of Company B on the effective date of the sale and became eligible for Company B’s 401k plan. Company A terminated the 401(k) plan as of the date of sale in March, 2023.

Now, Company A owner (has no employees any longer) wants to set up a prototype SEP-IRA for 2023. Is it possible for him to establish the SEP-IRA with an effective date after March, 2023 and exclude the former employees from the SEP-IRA contributions? For example, if the effective date of the SEP-IRA is June 1, 2023, can he look at his compensation from June 1, 2023 through the year end to base the SEP employer contribution? I understand that since it’s the same company offering the plan that he would have to look at both Company A 401k deferrals, safe harbor, matching and psp contributions as well as Company A SEP-IRA contributions and they would be subject to the $66,000 limit for the two plans combined.