I want to confirm my understanding of the attribution rule concerning children over 21 before I act on it.

PBGC regs 4041.2. For determination of a majority owner, attribution rules of IRC S414(b) apply. IRC S414(b) then refers to S1563 for attribution.

Per S1563(e)(6), the attribution between children over 21 and parents apply only if one of the parties involved owns "more than 50%" before application of S1563(e)(6).

So, if a father owns 50% or less and his two kids, ages over 21, each own 10% say, the chilfren's ownership is not attributed to the father or father's ownership is not attributed to the children. Is this correct or am I missing anything?

I think so. Also, a somewhat related thread regarding standard termination. Those kids can't forego receipt, but the 50% owner father can.

http://benefitslink.com/boards/index.php?s...=majority+owner

I agree with your interpretation. The one additional point I would make is that a majority owner stretches back 5 years, so if the kids are less than age 26, you have some history to look back on.