Confusion about profit share

One owner of 2 LLCs. 100% owner for both - pass through single member.  

LLC 1 - no employees, traditional 401k and he wants to max out profit share and employee deferrals

LLC 2 - 4 eligible employees, 1 participating.  SH 401k with 4% match (100% to 3%, with 50% for 4th and 5th%)

Given large profit share of first LLC 1 the concern is the 4% match doesn't cover the discretionary PS piece for LLC 2?  Does every employee have to get same percentage PS for LLC 2 or do we go to a cross tested plan (new comparability)?

You've got a single employer (controlled group) with two plans? Why make it difficult like that? They have to be tested together.

1 hour ago, 2bizoneguy said:

Given large profit share of first LLC 1 the concern is the 4% match doesn't cover the discretionary PS piece for LLC 2?

That is certainly a concern.  

1 hour ago, 2bizoneguy said:

Does every employee have to get same percentage PS for LLC 2 or do we go to a cross tested plan (new comparability)?

Depends on how the plan is written, ages of employees...

Well in your example is there any PS contrib to LLC2 plan? My guess is no. So when you test together LLC1 plan HCE is going to have some non-zero employer allocation rate with all NHCEs in the group having a 0% rate. I don't think that design will pass any of the various IRS testing methods.

As Bird says "all depends on how the document is written".