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That's right - an officer's kid doesn't suddenly end up a Key Employee the way an owner's kid can.

If everyone was in their own rate group, maybe you could construct a PS contribution for 2022 based on those still employed when you declare it in 2023 and still pass testing. Seems a very aggressive position to me though. But if it is simply 1000 hours, employed on the last day of the year, I don't see how you get around that.

How does an eligible participant "opt out from year to year" on a CB plan? Either you satisfy the accrual requirement and get a benefit or your don't, it's not a CODA. But assuming that there was some amendment timely and properly executed such that no HCE benefits under the plan, or no HCE worked enough hours to accrue a benefit, then as CB Zeller pointed out you will automatically pass gateway and 404(a) because the HCE rate is going to be $0 and 0%. Assuming the Plan's are not top heavy then if no HCE benefits for PS or CB than your PS could be $0. If the combo plan is top-heavy, RTD on how you satisfy that in your specific situation.

If no HCEs benefit in the plan, then the plan automatically satisfies 401(a)(4), including the gateway.