A colleague recently asked me if the ABPT could be run netting out any ADP/ACP refunds (due to a failed test). I told him that it could not. While I am confident in my answer, he asked for justification. I have looked and the best I could come up with was that all employer contributions are included in the ABPT. Since it was a contribution, it must be included regardless of the subsequent action. Can anyone provide a better explination or a cite? Also, if anyone disagrees with me, please let me know.

Don't disagree. Don't have time to look it up.

well, 1.410(b)-5(d) only employee contributions are disregarded from the avg ben test.
there is no exception that says "and also refunded deferrals/match". how come they would list one exception and not another? on the other hand, recall that 'catch-up' contributions are also not included. 1.414(v)-1(d)(3)(ii)
in addition, recall that refunded deferral/match are still considered annual additions - it would be odd to consider them in one spot and not in another. yet catch-up contributions are not considered annual additions. we seem to have a pattern here.
in addition, recall refunded deferrals are still considered in determining if a top heavy is due for the year - again, it would be odd to consider them in one spot and not in another. again, catch up contributions not used in determining if plan is top heavy.
I suppose another argument might be that no major software I know of excludes refunded deferrals/match from the test, but I guess they could all be wrong as well.

the only exception might be excess deferrals, which if refunded on time are not annual additions, and therefore there is some argument they should not be included.

There is a "Mike Preston rule" on this also. Since the refund would go to an HCE it would be safer to include it in the ABT absent clear guidance to the contrary. Honest I asked a similar question a couple of years ago and this rule worked for me.

Gee, my name is now synonymous with "worst case scenario"?

But, yes, if you can run a test (*ANY* test) on the basis which hurts the most and it still passes, it should satisfy any IRS/DOL auditor.

You are not going to be accused of advocating excessive conservatism too often, not to worry!

Au contraire. Much to my surprise, over the years, I have received a number of comments vis-a-vis sessions which indicate that people are disappointed because I have advocated what they see as excessive conservatism. Scarey, huh? I guess those are the folks that are disappointed when they go to a class on how to play Russian Roulette and find that the instructor doesn't advocate more than one bullet.