Controlled group of corporations exist - Co. A B & C in a safe harbor 401(k) plan - using 3% safe harbor non-elective.
If the employer does not want company C participating in the plan - is that okay assuming they pass coverage counting C's otherwise eligible employees? Does it matter that they utilize the 3% safe harbor non-elective?

What does the plan document say? The employer may not have a choice based on the way the plan is written.

The plan document is a Corbel Volume Submitter and Company C is not included as a member on the plan on the adoption agreement - they have been left out of the document becuase they are a non-participating employer.

Under the safe harbor section of the adoption agreement it states "The employer will make a Safe Harbor Non-elective contribution to the account of each "Eligible Employee" in an amount equal to 3% of the Employee's Compensation for the Plan Year."

An Eligible Participant means any Participant eligible to make elective deferrals.......

So, If the group C is not a participating employer, then they cannot have eligible participants and thus not share in the 3% SHNE contribution? Of course if coverage testing is failed then they have a problem.