Cannot play both LAN and splitscreen multiplayer after 26.20 update

Once multiplayer is enabled and visible to LAN players is selected, additional players cannot join locally via splitscreen multiplayer. Other LAN players can join from other switch devices/accounts, but a “player 2” cannot join locally. We tried both with joycons and pro controllers. Joycons display an error saying too many controllers connected. When using pro controllers it throws an error saying multiplayer must be disabled to play splitscreen. This issue started with the 26.20 update when the “select y for LAN play" option was removed at startup.