Correcting 415 Excess with Matched Deferrals

Say in 2025 a participant under age 50 defers $23,500, receives a non-SH match of $11,750 (match formula of 50% of all employee deferrals), and receives a PS contribution of $40,000 for a total of $75,250 and a 415 excess allocation of $5,250. 

Under EPCRS Section 6.06, the reduction would come first from unmatched deferrals (none as 50% of all deferrals are matched) and then from matched deferrals and the corresponding match.

In that scenario, is the correction:

1. Refund $3,500 of matched deferrals to the participant, and (2) transfer $1,750 of matching contributions to the plan's unallocated account; or
2. Refund $5,250 of matched deferrals to the participant, and (2) transfer $[edit: 2,625] of matching contributions to the plan's unallocated account?

In other words, does the "corresponding match" also count toward the 415 reduction (as in the first scenario)?

Thanks in advance. 

I think it should definitely be #1 as #2 would over correct and leave the person under the 415 limit. Does not the document spell that out?

plus, if you drop the K and not the M, you've now given the person a separate, less generous, matching formula.  Which invites the academic exercise to test it.

Thank you both. That was my initial reaction as well but wanted to confirm. 

@CuseFan, the plan document only says that 415 excesses must be corrected in accordance with EPCRS (which, to me at least, is not as clear as it could be on this point).