5500 Automatic Extension

Owner-only plan value exceeds $250,000 for the first time as of 12/31/2022.  We were asked to do the 5500 in late September.  The plan sponsor ( a sole proprietor) had his 1040 extended to 10-16-2023.  So we marked the 5500-EZ "Automatic Extension."    There was no 5558 filed before July 31, 2023.

It seems dubious the IRS would just trust that this 5500 is properly extended since there is no 5558 filed and I'd expect a notice.  If there is any question about this, the sponsor could just file under delinquent EZ procedure and pay $500 before the IRS notifies.  We've never filed a 5500 under the automatic extension option. 

I'm probably concerned for no reason right?

The instructions outline that option in detail. You can use it or not, as you see fit.

The Plan Sponsor simply needs to maintain a copy of the tax return extension in their files and produce it should the IRS request it.