New client has 1 participant MP Plan since 1999 but has treated it like a PS Plan

Hi all. A new client has a 1 participant MP Plan since 1999 but has treated it like a PS Plan.  The MP Plan Adoption Agreement is marked 25% of pay, but he has always varied contributions and skipped years sometimes making no contribution.  He self-administered and thought he was doing things correctly.  There's a signed PS Plan Adoption Agreement in his filed but it's marked "not used" which I know matters not.  I think whoever was advising him screwed up and got things backwards.

He has never had any employees.

Then I discovered a section of the Adoption Agreement  which says:

Benefit Adjustments(Optional)

_X_ Notwithstanding the above, $0.00 is the minimum contribution for any

Participant. (If Forfeitures are reallocated, any such reallocation shall be in addition to this amount.)

____Notwithstanding the above,$________ is the maximum allocation (including the allocation of any Forfeitures) for any Participant.

Any ideas on what should be done now?  Or if anything should be done about the past?

Thanks,

RayJ

Really a matter for tax/legal counsel, and depending upon the costs/risk associated with various options. Could, for example, simply terminate the plan, and hope no audit. Or amend and restate to a PS currently, and hope no audit. Or do a full-blown VCP filing, under which various options might be pursued.

One-person employers do seem to have a particular genius for finding old documents once they understand how important it is...oddly enough, they are usually the correct documents, timely executed, etc., etc... - amazing. Has he filed 5500 forms as required?

Yes, he started filing 5500's when he went over $250k in assets.   I felt to amend and restate to a PS currently was what I was leaning toward, so I'm going to recommend that

Thanks,  Belgarath

If this dates back to 1999, it is too late to restate except as part of a "hope for the best/risk worst" strategy. The only certain remedy is to submit for a correction under VCP.  Depending on facts and circumstances, correction might not be too onerous and would likely be negotiable.

Thanks, Luke, sounds like good advice.

RayJ