SCP restrictions for SEP's and SIMPLE-IRA's

[Belgarath]

Anyone know why the IRS doesn't allow SCP for "significant" violations in the 2-year correction period otherwise applicable for "regular" qualified plans? Just curious - seems strange to me.

To add an example:

Revenue Procedure 2013-12 allows SCP for SIMPLE-IRA plans, but only for “insignificant” violations.

Suppose a relatively small business intends to terminate a SIMPLE-IRA, but due to their misunderstanding of the requirements, they do not give appropriate advance notice to the employees for 2014, although they do notify the custodian (sometime in mid-2014) that they are terminating the plan for 2014.

When this error is discovered late in 2014, they realize this must be corrected, and that the correction will involve the normal 50% of the missed deferral opportunity, plus the full 3% match, for a total of 4.5% plus earnings for ALL eligible participants, based upon entire 2014 salaries.

In spite of the fact that this involves all participants, it is a one-time occurrence. Can this reasonably be considered an “insignificant” violation eligible for SCP?

My inclination is no, but I wondered what others think.