Retirement plan audit - owner only
I have a new client who came to me in early 2025 for TY24 tax prep. It’s a couple in their 70s, the wife has a Sch C for therapy practice. She had a retirement plan for herself which I asked about and was told it was a solo 401k. So I asked if they’d ever filed 5500-EZ forms and she had no idea. Their former CPA had died but the ML advisor indicated they never did. So I said we should do the voluntary compliance program and catch all ~20 years up which was done at the end of 2025. The client received the letter acknowledging all years were accepted about 6 weeks ago.
Over the weekend they received a letter examining the 2024 plan year. The documentation that ML had is awful. Given that and the lack of TPA, I recommended the client terminate the plan in 2025 and move to a SEP-IRA since she probably will only work for another 1-2 years. However this lack of good info concerns me for the audit.
Anyway I’m curious if anyone has ever dealt with an audit of an owner only retirement plan. Thanks!