Company X has 4 EEs and is owned by Company Z. All of the EEs in X are salaried. Company Z does not have a 401k plan in place. The EEs of company X want to contribute to a plan.... maybe simply deferrals, no ER contribution or match.

Is there any way around this? Would both companies have to have a plan? Deferral only plan?

the answer to this depends on how many ees there are in total and how many are HCE. in a controlled group, all ees are treated as employed by one employer. so for coverage you would have

X NHCEs / (X + Z) NHCEs / X HCEs / (X + Z) HCEs


where Z employees include only those ees who met the eligibility of X plan.
if you can pass coverage you are ok just covering X employees

SO, if company X wants to have a plan it has to allow Company Z EEs to participate. That creates more administration than parent Company Z wants to participate in.

Summarize.... No plan for Company X

"Defer only" plan still has to pass ADP, correct? I am pretty sure all 4 company X EEs are HCEs

probably yes, without seeing actual numbers I wouldn't say for sure.
suppose the 4 ees of X are HCE via comp only. also suppose there are lots of ees in Z, some of which are also HCE. If I recall correctly, I look at total ees when determining HCEs and if I use top paid group election it is possible that some of the company X employees are now NHCEs rather than HCEs.
but you are correct, if they are all HCEs the thing wont fly unless Z also particiaptes