Instructions For Form 5330 - Internal Revenue Service
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13Department of the Treasury
Instructions for Form 5330
Internal Revenue Service
(Rev. January 2008)
Return of Excise Taxes
Related to Employee Benefit Plans
a disqualified person enters into a
consideration in applying the overall
Section references are to the Internal
Revenue Code unless otherwise noted.
prohibited transaction in connection
limit on deductions.
with the acquisition, holding, or
General Instructions
Purpose of Form
disposition of certain securities or
commodities, and the transaction is
File Form 5330 to report the tax on:
What’s New
•
corrected within the 14-day correction
A prohibited tax shelter transaction
period, it will not be treated as a
Section 4971(g), Multiemployer Plans
(section 4965(a)(2)).
•
prohibited transaction and no tax will be
A minimum funding deficiency
in Endangered or Critical Status. For
assessed.
(section 4971(a) and (b)).
years beginning after 2007, the
•
Pension Protection Act of 2006 states
When calculating the prohibited
A failure to pay liquidity shortfall
that a failure to comply with a funding
transaction excise tax where there is a
(section 4971(f)).
•
failure to transmit participant
A failure to comply with a funding
improvement or rehabilitation plan, a
improvement or rehabilitation plan
failure to meet requirements for plans in
contributions (elective deferrals) or
endangered or critical status, or a
amounts that would have otherwise
(section 4971(g)(2)).
•
failure to adopt a rehabilitation plan
been payable to the participant in cash,
A failure to meet requirements for
the amount involved is based on
plans in endangered or critical status
may be subject to an excise tax.
(section 4971(g)(3)).
interest on those elective deferrals. See
•
Reminders
Rev. Rul. 2006-38.
A failure to adopt rehabilitation plan
(section 4971(g)(4)).
Generally, for financial investment
•
Nondeductible contributions to
advice provided after December 31,
Section 4965, Prohibited Tax Shelter
qualified plans (section 4972).
2006, the prohibited transaction rules of
Transactions. For tax years
•
Excess contributions to a section
section 4975(c) will not apply to any
beginning after May 17, 2006, the Tax
403(b)(7)(A) custodial account (section
transaction in connection with
Increase Prevention and Reconciliation
4973(a)(3)).
investment advice, if the investment
Act of 2005 provides that an entity
•
A prohibited transaction (section
advice provided by a fiduciary adviser is
manager of a tax-exempt organization
4975).
provided under an eligible investment
may be subject to an excise tax on
•
A disqualified benefit provided by
advice arrangement under Department
prohibited tax shelter transactions
funded welfare plans (section 4976).
of Labor guidelines.
under section 4965. In the case of a
•
Excess fringe benefits (section
plan entity, an entity manager is any
4977).
Section 4972, Nondeductible
person that approves or otherwise
•
Certain ESOP dispositions (section
Contributions to Qualified Employer
causes the tax-exempt entity to be a
4978).
Plans. The deduction limits of section
party to a prohibited tax shelter
•
Excess contributions to plans with
404(a)(1)(D) were altered for certain tax
transaction. The excise tax is $20,000
cash or deferred arrangements (section
years beginning after December 31,
and is assessed for each approval or
4979).
2005. The maximum deductible amount
other act causing the organization to be
•
Certain prohibited allocations of
is not less than the excess of 150% of a
a party to the prohibited tax shelter
qualified securities by an ESOP
plan’s current liability in the instance of
transaction.
(section 4979A).
a single-employer defined benefit plan
•
Reversions of qualified plan assets to
(140% for multiemployer plans) over
Section 4971, Failure to Meet the
employers (section 4980).
the value of that plan’s assets. Where
•
Minimum Funding Standards.
A failure of an applicable plan
an employer contributes to one or more
Section 214 of the Pension Protection
reducing future benefit accruals to
defined contribution plans, the overall
Act of 2006 provides that, for certain
satisfy notice requirements (section
limit applicable to combinations of
tax years, a multiemployer pension plan
4980F).
defined benefit plans and defined
with (1) less than 100 participants, (2)
contribution plans only applies to the
Who Must File
an annual normal cost of less than
extent that the contributions exceed 6%
$100,000, and (3) a funding deficiency
A Form 5330 must be filed by:
of the compensation otherwise paid or
on August 17, 2006, will not incur the
accrued during the tax year to the
1. Any plan entity manager of a
excise tax for an accumulated funding
beneficiaries under the defined
tax-exempt entity who approves the
deficiency under section 4971(a)(2) if
contribution plans. For purposes of
entity as a party to, or otherwise causes
the employers participated in a Federal
determining the excise tax on
the entity to be a party to, a prohibited
Fishery Capacity Reduction Program
nondeductible contributions, matching
tax shelter transaction during the tax
and the Northeast Fisheries Assistance
contributions to a defined contribution
year and knows or has reason to know
Program.
plan that are nondeductible solely
the transaction is a prohibited tax
because of the overall deduction limit
shelter transaction, see section
Section 4975, Prohibited
are disregarded. In addition, where
4965(a)(2).
Transactions. Generally, for purposes
there is a combination of defined
2. Any employer who is liable for the
of a prohibited transaction described in
benefit and defined contribution plans,
tax under section 4971 for failure to
section 4975(c)(1)(A), (B), (C), or (D), if
multiemployer plans are not taken into
meet the minimum funding standards
Cat. No. 11871X
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