2020 Annual Limitation Exceeded but PS deposited in 2021

I had a plan sponsor calculate their own profit sharing and deposit it into participant accounts prior to the annual testing being completed.  If this contribution was for the 2020 plan year but the profit sharing was deposited in 2021, can't they just reduce the participant accounts by forfeiting the excess?  They are being told they need to use the correction method used for EPCRS, and I don't agree since the funding wasn't done until after the plan year end.  Or at least that is how we've always handled these previously, so now I am questioning the method.

I don't like to use the term "forfeiting" because there is no forfeitable event, but I think an argument can be made that the money could be removed and put into a holding...or forfeiture account serving as a holding account.  All such monies would have to be treated as 2021 contributions.  It's not ideal.  You might also consider leaving the excess as a 2021 contribution (of course if someone isn't entitled then you have to take it out...again, not technically a forfeiture). 

^This.  But aren't there tax implications to the ER, especially if they filed their 2020 taxes and deducted the whole thing?

And I think what Bird is saying is maybe treat it as an excess allocation instead of a 415 violation.  There, you would move the excess to a suspense account (including earnings) and use those funds to offset future employer contributions.  In fact, they cannot make any more ER contributions until that account is exhausted.  See EPCRS 6.06.