Holden missed the whole of 2021/22 due to a persistent knee issue that required two operations.
The Northern Irishman’s deal expires on June 30, but the Saddlers will return for pre-season before then, so they do not have to rush into anything with the 24-year-old.
“Look, he’s back on the grass and is able to do a light run – and I mean a light run,” said Flynn on Holden.
“It’s been a long road to recovery. Rory’s contract finishes on June 30, but the beauty of it is that we’re back in for pre-season before that, so we can see how he’s progressed from there.
"It’s not one where we can just say ‘thank you for service, goodbye’. There’s a duty of care, and we want to do things the right way.
“Me and Rory will have a sit down and just take it from there, to be honest.”
Walsall are expected to release their official retained list in the coming days.
Meanwhile, Tyrese Shade, who spent the whole of last season on loan with the Saddlers, has confirmed his exit upon the end of his contract at Leicester.
The 21-year-old played 39 times in League Two and started regularly at wing-back under Flynn.