Post-severance compensation that crosses plan years - practical operation

[ASmithCPA]

This issue is the bane of my existence. A plan participant terminates on 12/26/2025 and receives a final paycheck on 1/3/2026.  The paycheck is for hours worked in 2025.  They don't work any hours in 2026.  The plan is a safe harbor 3% non-elective plan.  Are they an employee in 2026 who is includable and should receive contributions or because they aren't actively employed in 2026, do you treat them as not existing in 2026 for Plan purposes?  

The paycheck is $50.   

Do you allocate the $1.50 or do you just ignore it?  What if the plan doesn't allocate contributions until into the next plan year (2027) and the participant already took their distribution.  Do you actually have the Plan Sponsor fund that $1.50?

Do you ask your plan sponsors to provide you any compensation someone in this scenario earned and pick it up in 2025?

I believe the technically correct to the penny answer is they get the $1.50 in 2026, but what are you doing in actual practice?  Do you have a threshold for what you pass on providing?  

Same scenario, but the plan is an ADP testing plan.  Would you pull that person into your testing?  

I realize that common sense isn't all that common, but this is an area where it should be applied, IMO.  This is just such a pain to administer and am curious what others do.