Form 5500 - wholly owned question

[Guest planwizard]

Is a corporation which sponsors a 401(k) profit sharing plan "wholly owned" for purposes of EZ eligibility under the following facts?

1 participant (and possibly spouse) own 5% of outstanding stock

401(k) plan owns remaining 95% in rollover account(s) of the 1 participant (and possibly spouse)

I do not intend to engender with this post a discussion regarding the propriety of such an arrangement from a PT/fiduciary/exclusive benefit perspective since I know these so-called "ERSOPS" are controversial on this front. Just a simple Reporting question.

My thought is "Yes" it is wholly owned because 414(b) makes inapplicable the non-attribution rule of 1563(e)(3)© and, therfore, the stock is attributed to the participamt/bebeficiary.

Does this make sense?

Thanks for the help