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We would toss them out of the test.

You couldn't even provide a QNEC because their 415 limit of 100% of compensation is 100% x $0 = $0. it is unreasonable to include these people in testing. Agree w/Belgarath.

No This is also not correct The maximum deduction is equal to the greatest of: The minimum required contribution under section 430, Funding Target + Target Normal Cost + Cushion Amount - Assets, or If the plan is not subject to section 430(i), Funding Target determined as if the plan were subject to 430(i) + Target Normal Cost determined as if the plan were subject to 430(i) - Assets The cushion amount is equal to: 50% of the funding target, plus If plan benefits are based on compensation, the amount that the funding target would increase if future compensation increases were taken into account If plan benefits are not based on compensation, the amount that the funding target would increase if expected benefit increases for succeeding years were taken into account, based on the average annual benefit increase over the last 6 years

See instructions for Form 1099-R. On the 2022 instructions it's on page 7 under the heading "Failing the ADP or ACP Test after a Total Distribution" but it's been the same for quite some time, though it may be on different pages of the instructions in earlier years. https://www.irs.gov/pub/irs-pdf/i1099r.pdf

My point is that participants SHOULD be able to rely on the IRS website for that information. Same with retirement plan professionals. Sometimes we have questions. Unfortunately, I've learned not to trust the IRS site.