Starting a 401(k) for a doctor with 2 different corporate entities

[Guest pmetallic]

A doctor wants to start a 401(k) plan. He is 100% owner/partner of a C-Corp and an LLC. Can he start a 401(k) plan for one entity while excluding the employees of the other entity? Since there is common ownership, I believe the answer is no. Would it matter if he changed ownership of the excludable target entity to his wife?

[Blinky the 3-eyed Fish]

Can it pass coverage if one of the entity's employees are excluded? If so, then yes, he can excluded them, assuming you aren't using a standardized prototype document.

If he changed ownership to his wife, then that definitely wouldn't work if it's a common law state and probably not anywhere else because to avoid the attibution rules under the spousal exception each can't be involved in the others' business.