We have a husband/wife profit sharing plan where the wife owns 100% of the stock of the sponsoring employer. There is also a participating employer who has adopted the plan that is owned 50% by the husband and 50% by the wife.

Both fathers of the husband and wife work for the sponsoring employer that is owned 100% by the wife. The husband's father is over 70-1/2 so a minimum distribution was calculated for him however, the question has come up that the husband's father is not a deemed owner since his son doesn't directly own any of the stock of the sponsoring employer so he is not required to take the minimum distribution as he has not yet retired.

Is this correct? He is not required to receive the minimum distribution since he is not deemed to be an owner of the sponsoring employer?

A 5% owner is one that owns more than 5% of the plan sponsor or a related entity of the plan sponsor. The participating employer is a plan sponsor (and a related entity for that matter) and therefore the attribution of the husband's direct ownership is attributed to his father for MRD purposes. His father is therefore a 5% owner and requried to take MRD's.