SARSEP has failed ADP for 2010

[Guest sugar daddy]

I believe as long as they return deferrals and allocable income by APRIL 15, 2011 to the HCE's affected, they will be in compliance.

Questions:

1) Can excess contribuitons be treated as "Catch Up" if the HCE did not defer the max, therefore possibly eliminating or at least reducing the amount of the refund?

2) What options are there if the plan failed ADP in years prior to 2010? It is a very real possibility that this plan sponsor has failed its ADP test for several plan years and never addressed it. I know there are taxes the employer would have to pay. 10% of the amount of the excess contribuition I believe, for failing to timely notifiy affected HCE's. And if they fail to notify them following the end of the PY following the PY in which the excess contribution arose, they shall no longer maintain a plan which satisifies the reqquirements of sec. 408(k)(6). I have a feeling this plan has failed the ADP for several years. In that case, would VCP be the best/only option for them?

Thank You.