A client has exceeded the 15% deduction limitation with just deferrals and mandatory match for the plan year. Two questions: 1) Can this be corrected by refunding deferrals and/or match prior to the end of the year? 2) If so, how does one determine which participants must receive the refund(s)?

Ouch.

Anything helpful in the plan document, maybe expressly conditioning contributions on their being deductible under Code section 404?

In doing your 15%-of-compensation calculation, are you being as generous as allowed -- specifically, are you counting the compensation of participants who could have deferred but didn't? And using W-2 comp, not just comp as defined in the plan document (which might exclude bonuses, commissions, etc.)?

I find nothing in the plan document conditioning contributions upon their deductibility. And, yes, I am including all compensation, even for those employees who are eligible but not deferring. Any other ideas?

Ouch again. You may have to make the contribution and not be able to deduct all of it.

Yes, that is the conclusion we have come to. Thanks for everyone's input. Happy New Millennium!