It really is kind of fuzzy even after digging into it recently. It really seems to boil down to money. The first related 'deadline' is June 1, the date by which they have to release him if they want to realize 2026 cap savings. Thing is, it's only @6M in savings this year, so I guess if Lynch really really hates the guy, he could eat that and hold onto him past June. After that, it really looks like a gray area, NFL has just not been there before.
His current status means he doesn't take up a roster spot, so it seems that technically they could hold him, yeah, for the length of the contract. But they won't. His cap hit next year is crazy - $41M - and and based on reports they'll apparently save something like $33M in cap space by releasing him, so that's around a $75M 'swing' in cap space. The cap math is similar the next year in 2028. No way they're taking those hits, so he will get released at some point, and at the latest June 1, 2027 lol.
I can't see it stretching out like that, though, even past June 1 this year, Lynch can't be that petty/unprofessional/stupid, right? Just think of how FAs will look at SF if something like that happens - who would ever want to sign there again? Not to mention the absolute war that would erupt with the NFLPA. I do think they'll release him by June 1, possibly right after the draft when the 'trade' sham becomes laughable.