I know that under current law that if an employee does not render services to the employer at any time during the five year period ending on the determination date his/her balance is disregarded from the top heavy test. We have a situation where the owner of an s-corp took herself off the payroll five years ago. She still is somewhat involved in daily operations, she just doesn't take a salary. Can we exclude her from the top heavy test?

My read of the top heavy regs. finds the phrase "perform any services". Several uses of this (or similar) phrase. I did not find a reference to W-2 or to being on the payroll. My conclusion to your question is "no."