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If there is an ambiguity about what the plan provides, an administrator might prefer an interpretation that’s logically consistent with not only ERISA’s title I but also other Federal laws, including the Family and Medical Leave Act of 1993 if it applies. “With respect to pension and other retirement plans, any period of unpaid FMLA leave shall not be treated as or counted toward a break in service for purposes of vesting and eligibility to participate. Also, if the plan requires an employee to be employed on a specific date in order to be credited with a year of service for vesting, contributions or participation purposes, an employee on unpaid FMLA leave on that date shall be deemed to have been employed on that date. However, unpaid FMLA leave periods need not be treated as credited service for purposes of benefit accrual, vesting and eligibility to participate.” 29 C.F.R. § 825.215(d)(4) https://www.ecfr.gov/current/title-29/part-825/section-825.215#p-825.215(d)(4). This is not advice to anyone.

The owner was paid out just after the termination amendment in early 2019. And maybe that is why they have the missed filings. In any event, filing Forms 5500-SF for the remaining years appears to be the way to go.

Before responding, let me share this. About 4 years ago I did some research for a client who asked how plans actually respond to this question. The client had responded 'yes' for several years and had never had any feedback from either the IRS or DOL. The client was checking 'yes' because the plan had some account for some missing participants who had been missing for a very long time, and in-house counsel insisted that they had to check 'yes' (even though the auditors disagreed). I downloaded the 5500 and 5500-SF data files from EFAST2 and looked at the responses to this question. There were not very many 'yes' responses, and almost all of the 'yes' of the were for DB plans. Only 21 'yes' responses were for DC plans. I called the DOL and asked them about how to respond to the question and they said this was an IRS question and I should talk to the IRS. I called the IRS and asked them about how to respond to the question and they said if it's on the 5500, I should call the DOL. After some persistent follow up, the agencies did speak with each other and agreed that the IRS would be the agency that would follow up with me. Never heard back from anyone. (The client ultimately sought advice from outside counsel and started responding 'no'. Guess who is no longer working at the company.) Enough tales of woe. Does the plan document have clear language that account balances under the cash-out limit for terminated participants absolutely must be paid within a fixed time period after termination (to allow for participant consent if available)? If not, then the is wiggle room for an interpretation that the payment is not mandatory. Be sure to read the details in any Basic Plan Document that is associated with an Adoption Agreement. The language in the Adoption Agreement tends to be abbreviated and sounds more absolute than the supporting language in the BPD.

I agree. If you Google "is a person on leave considered employed" you'll get their AI Overview and a lot of snippets, all of the opinion that such a person is still considered employed. If the only choices are employed or terminated, then clearly the answer is employed. However, be sure that the plan document does not otherwise address this in some other fashion.

A Qualified Replacement Plan (QRP) need not be a new plan, it can be an existing plan.

Is the owner the final one with the balance? If not, no EZ.

A few things to consider: Elective deferrals are not counted in determining the maximum deductible amount. The 25% maximum deductible limit applies only to employer contributions (e.g., profit sharing, match...) and is calculated based on total compensation of all eligible participants. This is not a limit on any individual participant. The maximum deferral for 2024 was $23,000 and for 2025 is $23,500. It the participant is over age 50, catch up contribution limit is $7,500 for each year. If, for example, the employee has W-2 of $25,000 for 2024 and defers $23,000 for 2024, then the employee's net taxable amount for 2024 is $2,000. Since the employee total annual additions in this case is 100% of pay, then the employee could receive an employer contribution of $2,000 and this would not affect the employee's W-2 compensation of $25,000 nor the employee's net taxable compensation of $2,000. The calculations are the same for 2025 after adjusting the numbers for the deferral limit to $23,500. If the employee is the only eligible participant in the plan, the employer deductible limit is 25% of $25,000 (unreduced for deferrals) which is $6,250.