When it comes to dormant accounts, can the dormant status be removed based on contact with the client or do they have to make a physical deposit/withdrawal? Thank you.

This is a business decision that should be driven by your identity theft policy and procedures.

You should also consider applicable state law for what is considered "customer contact" according to the escheatment laws of your state as many institution reset their escheatment clock based on removing an account from dormant status.