Late Deferrals - VFC Program Question

[rocknrolls2]

Employer X maintains a 401(k) plan for its employees. Due to the fact that payroll is decentralized, when there was a change at one of the locations, HQ put the employees onto a new payroll system resulting in deferrals being taken from their compensation but not deposited into the plan. After a few participant complaints, the problem was discovered and the amounts were credited to the affected participants' accounts and credited with earnings at a stable value fund rate (which was higher than the VFC online calculator rate). In preparing a VFC application for this, I read the rules for the class exemption and learned that to get out of the notice requirement, the employer could credit the amount of the 4975 excise tax otherwise due to the affected participants' accounts. Another part of the class exemption states that in lieu of calculating the excise tax, the plan could use the online calculator amount of interest and contribute that. It seems to me that the employees who are impacted by this would be getting double credit for interest, first to make the necessary correction and then to comply with the exception to the notice requirement under the class exemption. Am I missing something or is this what is intended? Thanks.