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Because when it gets complicated, it's always the actuary who should know, no matter the subject . However, this one clearly falls under the purview of a CPA.

First thought is, why ask the actuary's office rather than the accountant's?

That rule—26 C.F.R. § 1.414(c)-5—refers to an 80% overlap in the governing bodies of exempt organizations, which the rule describes as “an organization that is exempt from tax under [Internal Revenue Code] section 501(a)[.]” https://www.ecfr.gov/current/title-26/section-1.414(c)-5. Although a public-school district is not subject to Federal income tax, that results from law other than I.R.C. § 501(a). Further, even if one were to interpret I.R.C. § 414 to treat a public-school district and a foundation as one employer, that might not necessarily answer questions about whether a governmental plan may cover the foundation’s employees without losing ERISA’s governmental-plan exemption.

Boy sure would be nice if the IRS had clear guidance on M&A and how it affects plans and testing wouldn't it? I think the approach taken is reasonable and would not be challenged by the IRS assuming A now owns all of B or at least enough for a CG to exist in the testing year. I also think testing them separately would be acceptable as well.

You need to go to an experienced ERISA attorney for advice.

Here are Mercer's projections.

My favorite answer to most questions, read the plan document.

My recollection is that the regs regarding non-profit entities (501(c)(3) ?) suggest a controlled group concept involving shared Board members and control by one entity over the other. That's my recollection without looking it up. But Peter is right, Carol is the person to ask and I have worked with her firm in the past.

"By the way, a lady in a bar told me I had a mistake of face once. No respect!"

Assuming this is a controlled group, if the other companies have a 401(k), do aggregate testing. You'll probably fail and need refunds but hopeful you are not top-heavy. If the staffing firm doesn't have a 401(k), the correction is to cover the the other entities. Make a QNEC for missed deferral opportunity. Then correct the ADP failure (assuming there is one) either by refund or QNEC. Then make any additional contribution required top-heavy minimum since it sounds like the only contribution is the owner's 401(k). Possibly requiring VCP if not eligible for self correction to have the staffing firm adopt. The Plan wasn't ineligible,it just sounds like it fails coverage.

they can have both - if the documents allow - the model SEP doc does not. If they do have both - the combined limits for 404 and such apply. I would be cautious of removing money from the SEP. The standard correction for a non-deductible contribution is an excise tax and carryforward, not removal of the excess unless it also violates 415 etc.