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Well in your example is there any PS contrib to LLC2 plan? My guess is no. So when you test together LLC1 plan HCE is going to have some non-zero employer allocation rate with all NHCEs in the group having a 0% rate. I don't think that design will pass any of the various IRS testing methods. As Bird says "all depends on how the document is written".

I'm not aware the Hacienda has a preapproval process. It is my understanding that any plan intended to qualify under Puerto Rico Code must submit for it's own determination letter.

That is certainly a concern. Depends on how the plan is written, ages of employees...

You've got a single employer (controlled group) with two plans? Why make it difficult like that? They have to be tested together.

From draft IRS Publication 15-A (released January 13): "Although the final redesigned Form W-4P and new Form W-4R are available for use in 2022, the IRS is postponing the requirement to begin using the forms until January 1, 2023. Payers should update their system programming for these forms and are encouraged to begin using them in 2022 as soon as programming is in place but may otherwise continue to use the 2021 Form W-4P in 2022."

Now you can find all 76 returns using code 4P. Fewer than 10 plans a year, one of which definitely seems wrong by its title. Of course, since advisors like to mine these searches for prospects, I'll just say that'd be a *very* targeted marketing campaign.

Assuming the husband is over 50, they can both defer $26,000, and the $32,875.50 employer contribution can be split any way they want between the two of them, with the only limits being that they each have to get at least some of it, and the maximum for the wife is $8,900. Also assuming that there are no other employees so no coverage or non-discrimination testing concerns.

Catch-up contributions do not count towards the annual additions limit. Wife defers $26,000 (assuming we're talking 2021 limits here). That exceeds the 402(g) limit so $6,500 is reclassified as catch-up. The remaining $19,500 does count against the annual additions limit. Her annual additions limit is the lesser of $58,000 or 100% of comp. In this case that's $28,400. The amount she has left under the annual additions limit is $28,400 - $19,500 = $8,900. That is the maximum employer contribution that could be allocated to her for 2021. That does exceed 25% of comp, but remember that the 25% deduction limit is applied on an employer-wide basis. $103,090 + 28,400 = $131,490 x 25% = $32,872.50 is the deduction limit for 2021. You could allocate $8,900 to the wife and the remaining $23,972.50 to the husband, if you wanted to. This is assuming no other employees besides the husband & wife.