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Be careful if such terminated employees cannot be statutorily excluded from testing, it might create compliance headaches for nondiscrimination, gateway in DCP and minimum participation percentages.

If it is truly severance pay - pay given after termination of employment to which the person would not otherwise had been entitled to - then it is not considered compensation for retirement plan purposes and should not be considered for deferrals or matching contributions.

Yes, self-certification removes an employer/administrator from judging a participant’s circumstances. That’s why I like it. But I suggest also repealing—for § 401(k), § 403(b), and governmental § 457(b)—the tax law restraints against a distribution before severance-from-employment or age 59½. Yet, not everything that happens in life calls for an exception from the § 72(t) tax on an early distribution. But I didn’t overcome, or even attempt, the rigors of being elected to Congress.

Isn't that what self certification does?

Top of page 11 of 5500-SF 2023 instructions: The plan (a) covered fewer than 100 participants at the beginning of the plan year 2023, *or* (b) under 29 CFR 2520.103-1(d) was eligible to and filed as a small plan for plan year 2022 and did not cover more than 120 participants at the beginning of plan year 2023. As long as your plan filed 5500-SF in 2024 you could file a 5500-SF in 2025 if the plan had less than 120 participants.

It sounds as though you have non-resident aliens earning no U.S. source income. As long as your plan affirmatively excludes people like this, you can exclude them from coverage/nondiscrimination testing.