Whose employee is this, whose 401k plan is this?

Medical professional #1 runs a stand alone business.  No employees, only the owner.  She has a solo 401k for herself.

Medical professional #2 also runs a stand alone business.  No employees, only the owner.  She also has a solo 401k for herself.

#1 and #2 form a separate company to handle administrative work for both companies.  Assume 50/50 ownership.  They plan to hire 1 individual to handle the admin duties that pertain to the other 2 companies.

With 50/50 ownership I don't see a controlled group here.  But this would appear to be an Affiliated Service Groups ("ASG").

If an ASG, what are the 401k plan implications:

(1) Assuming full time employment, will the employee of the new company eventually be eligible to participate in one or both of the solo 401k plans?

(2) Can #1 and #2 still maintain separate plans, different benefit structures, etc  if they start the new company?  is there any required aggregation?

Thank you

Yes, appears this will be ASG. 

If separate plans, there will be aggregation needed to satisfy nondiscrimination and either the new company #3 will need a plan for this employee or they will need to be covered under the plan of #1 or #2. Maybe have #1 and #2 participate prospectively in plan #3, essentially freezing their respective plans, unless they are similar enough to merge into a single plan #3.

Any separate benefit structures, rights or features will need to satisfy coverage/nondiscrimination, which makes keeping an active owner only plan within the ASG difficult.

It is definitely feels like an ASG.  Therefore, all the plans sponsored by ASG must be treated as a single plan for compliance purposes; without the employee being covered and not getting the employer-paid benefit you either failing coverage or non-discrimination or both.  As a practical recommendation I would approach that as a total redesign opportunity rather than trying to "squeeze" it in into Plan # 1 or Plan #2. 

On 9/28/2023 at 2:59 PM, truphao said:

As a practical recommendation I would approach that as a total redesign opportunity rather than trying to "squeeze" it in into Plan # 1 or Plan #2. 

Yes, that is the best approach for sure, the potential challenge getting two medical professionals used to doing their own thing to agree on a unified plan/approach. Good luck!