Improper return of excess contributions

[R. Butler]

We have fiscal year plan with a 9/30/00 year end. Completed all the work. ADP & ACP tests both failed, refunds were made. Employer now informs us that the salaries provided us were incorrect.

With the new salaries ADP test fails, but not as bad; the ACP test fails worse. The net effect is that the HCE's received to large a refund. It is my understanding that the appropriate correction is to have the HCE's return the excess amount received. Is that correct?

Assuming the proper correction is to return the excess amount received, can I net the ADP and ACP test differences against each other and have the net excess retruned or do the HCE's have to return the ADP excess and get another distribution for the ACP excess. Example: HCE received a total of $200. $100 for the ADP test, $100 for the ACP test. Should have received a total of $180; $60 for the ADP test and $120 for the ACP test. Can I have the HCE return the net difference of $20 or should the HCE return $40 for the ADP excess and receive an additional check of $20 for the ACP excess?