Failure to timely adopt MRD amendment

[JWK]

Does anyone have experience asserting "mitigating circumstances" to reduce the VCP sanction for failing to timely amend for the final minimum required distribution regulations for a DC plan?

We submitted a 401(k) plan for a determination letter in February 2007. Plan sponsor failed to amend for the new minimum required distribution regulations (actually, there was a 2 sentence amendment that said plan would comply with the rules, but with no detail whatsoever). IRS reviewer says sponsor failed to adopt a good faith MRD amendment, which I think we almost have to concede. However, all other amendments have been made on a timely basis, and the reviewer had only one substantive comment on the plan document itself (related to the top heavy provisions, which, given the plan's size, will never be an issue under this plan).

Plan has been in operational compliance on MRDs at all times, which can be shown by the recordkeeper's adoption of a process to comply with the final regulations.

Plan sponsor is looking at a hefty penalty for a single oversight during the 20-plus year history of this plan. Reviewer says he hasn't heard anything yet that would support mitigation.

Can anyone help? Thanks.