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5330 (IRS Form 5330)

Last Updated March 21, 2009

Definition

IRS form used  to report the tax on the following items:
    • A minimum funding deficiency (section 4971).
    • Nondeductible contributions to qualified plans (section 4972).
    • Excess contributions to a section 403(b)(7)(A) custodial account (section 4973(a)(3)).
    • A prohibited transaction (section 4975).
    • A disqualified benefit provided by funded welfare plans (section 4976).
    • Excess fringe benefits (section 4977).
    • Certain ESOP dispositions (sections 4978 and 4978A).
    • Excess contributions to plans with cash or deferred arrangements (section 4979).
    • Certain prohibited allocations of qualified securities by an ESOP (section 4979A).
    • Reversions of qualified plan assets to employers (section 4980).
    • A failure to pay liquidity shortfall (section 4971(f)).
    • A failure of applicable plans reducing future benefit accruals to satisfy notice requirements (section 4980F).
 
One Form 5330 may be filed to report one or more of these taxes. However, if the taxes are from separate plans, separate forms must be filed for each plan.
 
Referring Cite
 
Additional Helpful Information
  • According to the IRS, the following mistakes commonly occur with filing Form 5330
 
      • Failure to sign the Form 5330.
      • Leaving plan number blank or using an invalid plan number.
      • Using a single Form 5330 to report two or more excise taxes that do not have the same filing due date and therefore may not be filed together.
      • Failure to complete Lines 13a-13c in Part I when there is tax reflected on Line(s) 1 through 12b.
      • If Part IV is applicable, failure to check the appropriate box on Line 25a (discrete or not discrete prohibited transactions).
      • If Part IV is applicable, failure to properly complete Line 25b, columns (d) and (e).
      • Confusion about the relationship between Parts IV and V of the Form 5330.
  • One Form 5330 should be filed to report excise taxes with the same filing due date. One Form 5330 may be filed to report one or more of these taxes. However, if the taxes are from separate plans, separate forms should be filed for each plan.
  • Generally, the filing of a Form 5330 starts the statute of limitations running only with respect to the particular excise tax(es) reported on that Form 5330. However, statutes of limitations with respect to the prohibited transaction excise tax(es) are based on the filing of the applicable Form 5500.
  • Form 5558(Application for Extension of Time to File Certain Employee Plan Returns) may be filed , to request an extension of time to file. If approved, an extension of up to 6 months after the normal due date of Form 5330 may be granted
 
  • If Form 5330 is not filed by the due date, including extensions, the plan sponsor may have to pay a penalty of 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. The minimum penalty for a return that is more than 60 days late is the smaller of the tax due or $100. The penalty will not be imposed if the  plan sponsor show that the failure to file on time was due to reasonable cause. If the plan sponsor files late, a statement explaining the reasonable cause must be attached to Form 5330.
 
  • Penalty for late payment of tax. If the plan sponsor does not pay the tax when due, penalty(of ½ of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax) may have to be paid. The penalty will not be imposed if the plan sponsor can show that the failure to pay on time was due to reasonable cause.
  • Interest and penalties for late filing and late payment will be billed separately after the return is filed.