Determination date for top-heavy test is 12/31/99.
Participant terminated 10/31/94.
Participant received a distribtuion 3/31/95.

Is this distribution included in the top-heavy test in accordance with Code Sec. 416(g)(3)or excluded from the test in accordance with Code Sec. 416(g)(4)(E)?

The 5-year window outlined in the TH regulations keys on termination date, not distribution date. So in your situation (presumably testing 2000 plan year) with determination date of 12/31/1999, your participant who quit in 1994, paid in 1995, would be excluded from testing. This makes some intuitive sense as he could have been paid out at any point since termination (and in fact could still have balance in plan). Key is to focus on termination date for testing.

Thanks mwyatt, I agree with you. However, isn't distribution date also important? For example, if the participant had received an in-service withdrawal 10/31/94 and then terminated 3/31/95, wouldn't the '94 distribution (withdrawal) be excluded from the top-heavy test?

yes.
it is one of those
'ignore balances/amounts after the greater of 5 years termination or distribution'
or something like that.
includes hardships, corrective distributions etc.

Caution. Focusing on "termination date" is shorthand that may not be correct. The correct emphasis is the last date on which the EE had an hour of service. Not hard to imagine that the last hours date could precede or follow the the term date.