A plan document states "Only Participants who have completed a Year of Service during the Plan Year and are actively employed on the last day of the Plan Year shall be eligible to share..." in the contribution allocation. If a participant is laid off as of the last day of the plan year, should they share in the contribution allocation?

Not sure. One hopes that the plan will answer that question, but perhaps you have checked. If not, then you may have a situation that needs administrative interpretation. Usual advisable to make sure it is in writing.

They were actively employed on the last day of the Plan Year.

Can you give any sites that back up that they are actively employed?

You wrote that "... a participant is laid off as of the last day of the plan year..."

Does that not mean that they were actively employed on and during the last day of the plan year?

No. The employee was laid off sometime earlier in the year, and as of the last day of the plan year, they were still laid off. I'm asking if a laid off employee is treated as a terminee, or as an active employee.

They are inactive employees. Why would you think otherwise? BTW, your first post confused me as well.

Did the laid off employee collect unemployment benefits? If so how could he be employed at year end?

If the employment relationship was terminated when the employee was laid off, then they are not still employed at year end. But if the employment relationship did not end (i.e., they were on a leave of absence or stand down), then they were not terminated and are entitled to an allocation from a plan with an end of year requirement.