Let's say you have a plan that you discover needs to have their ADP/ACP testing redone for the 2000 plan year. The original test failed and refunds were made. You now have two choices:

1. Redo the test using all eligible employees, which gives you failing results so you are now faced with making additional refunds plus QNEC to correct, OR

2. Redo the test carving out your otherwise excludable group, pass the test by a comfortable margin and now deal with having made too much in the way of refunds (how would you deal with that anyway?).

Where would you rather be and why?

Thanks.

If you distributed too much money, you are suppose to request the $ back. According to the most recent Rev Proc. if it is less than $100, you don't have to worry about it.
Depending on all the options available under the ADP test I guess I would try to find one that best suits your needs...
e.g. shifting, if there was an HCE with less than 1 year of service treat them in the otherwise excludable group, use comp less deferrals for testing purposes (if document allows it), use current year or prior year, etc.