Pre-1997 method for distributing excess contributions from a failed AD

[Guest VPA]

We have recently taken over a 401(k) plan where the accountant performed the ADP/ACP tests for 1997, 1998, and 1999. While reviewing the tests, it appears as though the excess contribution refunds were calculated using the pre-1997 method (reducing the HCEs with the highest deferral percentage).

The document has not been updated as of yet for the changes from the GUST amendments. Our question is whether the prior year testing refunds should be recalculated using the method proscribed by the Small Business Job Protection Act or if we can leave the tests the way they are. Could we then include in the GUST amendment that the plan did not elect to use the new correction method for those plan years?

[MWeddell]

Using the pre-SBJPA method of computing refunds is not allowed for plan years beginning after 12/31/1996, regardless of whether the document has been updated.