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I've been presented with this situation:
Two spouses own two S-corps -
MS owned by J 51% and her husband O 49%
OC owned 100% by O
It's a controlled group because O owns part of MS.

Each business has only one other employee, an NHCE.
OC has a 401k plan (I don't have any other details yet).

Of course, J wants a 401k plan to cover MS... and only MS.

I want to say that as long as the populations are stable, then this is OK.  No matter what feature I put into the MS plan, I'll either have:
1 HCE benefitting, 1 HCE nonbenefitting, 1 NHCE benefitting, and 1 NHCE nonbenefitting = 1/2 / 1/2= 100%
or
2 HCE benefitting, 2 NHCE benefitting = 2/2 / 2/2= 100%

This seems... simplistic?  Like I'm missing something?  What trap am I unwittingly walking into (other than the one where one of the NHCEs leaves and the testing fails and it's a disaster).

Thanks!

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