Missed Deferral Correction For Terminated Participant

We have a client who needs to correct a missed deferral opportunity.  The error occurred last year over the course of three payrolls.  The plan has auto-enrollment and therefore qualifies for the safe harbor correction method.  This issue is that the participant is terminated and will not receive compensation any longer.  Because the regulations state that:

The plan will correct the deferrals by the first payment of compensation on or after the earlier of:

• 9 ½ months after end of Plan Year when failure first occurred
• Last day of month following employee notification of error

Can the plan use the safe harbor method and not make the QNEC even though the participant will not receive compensation?

Ilene Ferenczy has a nice piece on her firm's website ("solutions-in-a-flash") on this topic.  It was prepared in August of last year.  It was one of the first pieces that I read that confirmed that if a participant terminated before the correction is made the traditional QNEC correction must be provided to that participant.

In order to use the safe harbor correction method in EPCRS Appendix A, ALL of the following conditions must be satisfied (conditions greatly abbreviated and simplified):

1.  correct deferrals begin

2.  notice is given

3.  corrective allocations are made

Since the participant has terminated employment, you can't satisfy #1, which means you can't satisfy #2 either. Since you don't satisfy all of the conditions, you can't use the safe harbor correction method. 

Thank you.

And there's no defense for suggesting the correct deferrals began properly at $0 after the termination? 

(Notice is easy enough, although might cause head-scratching for an ex-employee....)