One Participant Plan - Family Attribution

I have a 401(k) plan that covers a family group (Father, Mother, children). The entity is a partnership (parents are the owners) and they will pay the kids a wage until they are 18 years old and have the children participate in the 401(k) plan. When a child turns 18 they will setup an S corporation for the child and setup a separate 401(k) plan. My question is this separate 401(k) plan for the child's S corporation (this plan only covers the child) a "one-participant" plan and can it wait until it has $250,000 to file a 5500-EZ? Or, does the family attribution of the ownership of the child being attributed to the parent's cause the plan to not be a "one-participant" plan? I am pretty sure the child's entity would be in a controlled group with the family partnership  but since the plan only covering the child's S corporation is the plan a one-participant plan?

What is the S Corporation doing? Where does the money come from? The current partnership is having to file a 5500SF anyway since the kids participate. There is always attribution under 1563 between a child and parent until the age of 21 and then there are exceptions.

I'm assuming they are trying to slide by something here, but would appreciate additional details on the goal of this weird plan.

The family is a Youtube family and the older daughter that opened her own S corporation does her own videos as well as participate in the videos of the family. To be honest I am not sure why the plans were setup this way, we just took them over. 

Sounds like it is probably an Affilliated Service Group.   The significance of this is that all "one-participant plans" of a controlled/affilliated service group are considerd in the aggregate to determine if the $250,000 threshhold is exceeded. From the 5500-EZ instructions (2019)

"You do not have to file Form 5500-EZ for the 2019 plan year for a one-participant plan if the total of the plan's assets and the assets of all other one-participant plans maintained by the employer at the end of the 2019 plan year does not exceed $250,000, unless 2019 is the final plan year of the plan. For more information on final plan years, see Final Return, later."

So interestingly, if the parent's plan is not a one-participant plan because of the kids, then the elder daughters plan does not have to be aggregated with it for purposes of determining the $250,000 threshhold.  Although shockingly the above quote from the 5500-EZ instructions does not indicate that the term "employer" includes all employers in the controlled group/affilliated service group (nor anywhere else in the instructions) , it should be read that way in my humble opinion.

As Bill said, if non-owner kids are participating in the parents 401k plan, then it is not a one-participant plan.  If the elder daughter owns her own S-Corp and has her own plan, then that plan would be a one-participant plan.  similarly if she is not considered to be a common law employee of the parent's S-Corp she would not prevent her parents plan from being a one-participant plan.  But because the elder daughter has younger siblings who presumably are common law employees of the parents, they would prevent the plan from being one-participant.