Correction of failure to make nondeductible MPP contributions which are returnable under plan

[Guest Hanging In]

Has anyone had any experience with VCP, or audit CAP (please specify which) in a situation like this:

Client (small employer Doctor practice) has a money purchase plan that provides for the maximum 415 contribution for the owner and amount necessary to satisfy integration for other employees (unusual but not my issue). Client adopts a DB plan. The Client is now subject to the 25% deduction limit. Advisor tells Client to reduce MPP contributions to the 25% limit (this happens for several years). The problem is that the plan does not provide for a reduction in contributions. Under the MPP, the Client was required to make the contributions as provided under the formula. The MPP did provide, however, that any contributions that were not deductible would be returned to the employer.

My take is that the IRS may require payment of the excise taxes, but should permit the employer to get a refund of the contributions (at least for the owner). Any ideas?