When a FULL is discarded, all of its child dependencies (DIFF & INC) are discarded as well. What will remain will be FULL #2 & #3 (and all their dependencies) and the new FULL #4.
In your scenario, no INC retention or merging is even required, they will be pruned by the 3-mo FULL retention schedule.
In your scenario, no INC retention or merging is even required, they will be pruned by the 3-mo FULL retention schedule.