If excess amount is not corrected within 12 months, the cash or deferred portion of the plan (or the entire plan if employer-matching contributions are involved) is disqualified for the plan year in which the contribution was made and every year thereafter until distributed. File under VCP or self-correct under SCP as applicable under EPCRS.

SCP could be done within two years after the QNEC correction deadline which is the last day of the plan year after the plan year that was tested. For example, if the test year was 2008 (calendar year plan) the last day that a QNEC could be made would be December 31, 2009. Two years after that would be the deadline for SCP, in this example that would be December 31, 2011.

The correction under EPCRS is to contribute a QNEC to the NHCE to the extent necessary to raise the % to a level to pass the ADP or ACP Test. Cite is EPCRS, Rev. Proc. 2008-50 Appendix A, Section .03 (page 69).

An acceptable correction method under EPCRS is to return deferrals to the affected HCEs and contribute a QNEC for the same amount to the NHCE group, this is known as the one-to-one correction method. Cite is EPCRS, Rev. Proc. 2008-50 Appendix B, Section 2.01(b) (page 79)

If ultimately distributed, returned excess contributions and excess aggregate contributions are considered for Top Heavy calculation and are included in the annual additions calculation.

The plan may offset the excess contributions to be distributed by any excess deferrals that have already been distributed to the participant.