Frozen DB Plan and 401(a)(26) Testing

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I have a takeover DB plan in which the accrued benefits were frozen back in 2008. When the benefits were frozen in 2008, the plan had non-owner participants (PBGC covered) and was underfunded. Since that time, all the non-owner participants approximately 5 left employment and were paid a lump sum distribution. Also, the employer has hired several more employees since that time.

Does anyone have experience in testing a frozen DB plan for 401(a)(26) compliance? My understanding is that the 401(a)(26) would look something like this:

Prior Benefit Structure:

Participants with AB / Total Non-Excludible Employees >=40%

Participants with AB = Number of participants with an accrued benefit under the Plan = 1 This category does not include former participants that have recevied a lump sum distribution.

Total Non-Excludible Employees = Total number of employees who met the eligibility requirements of the Plan, including terminated employees and former participants that received lump sums = 8

Participants with AB / Total Non-Excludible Employees = 1/8 = 12.5% Plan fails test.

Has anyone had to deal with a situation like this?