Form 5500 for employee severance plan

[holdco]

Hello everyone!

A new Form 5500 question. An employee severance plan is covered by ERISA. It has more than 100 participants, but fewer than 100 received any compensation from it. It's unfunded, no trust, general assets only.

My question is, does it matter that fewer than 100 participants received money? Under DOL Reg. 2520.104-20 and 2510.3-3, it appears that as soon as someone is eligible to participate in the plan, they are covered by it. The instructions to Form 5500 suggest the same thing, namely that we have to file. However, the client company is pushing back saying that the participants aren't "vested" in the plan and fewer than 100 got paid.

The language in 2510.3-3(d)(i)(B) states that the participant can also become eligible under the plan for a benefit subject only to the occurrence of the contingency for which the benefit is provided. Could this possibly mean that someone becomes a participant only when they're terminated? I guess that could justify the client position.

Does any of this make sense to you? What would you do?

Thank you for any thoughts.