Employee incorrectly classified as HCE

[Guest Rick Butler]

If an ADP test fails due to an employee being incorrectly classified as an HCE, can any corrective measures be taken to restore distributions already made to HCE's?

[MWeddell]

There's nothing in the regulations allowing you to reverse the corrective distributions. However, I think you'll have to correct the distributions using the EPCRS because now that the ADP test is run correctly with the correct HCE determinations, there is no distributable event allowing for the distributions to HCEs.