Instructions For Form 5330 - Internal Revenue Service (Page 10 of 13) in pdf

within the taxable period, an additional

improvement or rehabilitation plan,

Section 4971(g)(4)—Failure to

tax equal to 100% of the accumulated

failure to meet requirements for plans in

Adopt Rehabilitation Plan

funding deficiency to the extent not

endangered or critical status, or failure

An excise tax is incurred by the failure

corrected is imposed by section

to adopt a rehabilitation plan. See page

to adopt a rehabilitation plan within the

4971(b).

5 of the instructions for information on

time prescribed under section 432. The

Section 4971(g)(2), Failure to Comply

The taxable period is the period

amount of the tax, which is imposed on

With A Funding Improvement or

beginning with the end of the plan year

the plan sponsor, is equal to the greater

Rehabilitation Plan.

where there is an accumulated funding

of the amount of the tax imposed under

deficiency and ending on the earlier of:

section 4971(a) (determined without

•

At the time of the drafting of

The date the notice of deficiency for

regard to section 4971(g)), or the

these instructions, technical

the section 4971(a) excise tax is

amount equal to $1,100 multiplied by

correction bills were pending in

CAUTION

mailed, or

the number of days in the tax year

•

the Congress that may alter this.

The date the section 4971(a) excise

which are included in the period that

tax is assessed.

begins on the first day of the 240-day

Section 4971(g)(3)—Failure to

period that a multiemployer plan has to

Report the tax for failure to correct

Meet Requirements for Plans in

adopt a rehabilitation plan once it has

the accumulated funding deficiency on

Endangered or Critical Status

entered critical status and that ends on

Part I, Section B, line 8b.

An excise tax is incurred by the failure

the day that the rehabilitation plan is

Section 214 of the Pension

to meet requirements for plans in

adopted. Liability for this tax is imposed

Protection Act of 2006 provides that, for

endangered or critical status. A plan

on each plan sponsor.

certain tax years ending after August

which is in seriously endangered status

This excise tax may not be waived.

17, 2006, a multiemployer pension plan

that fails to meet the applicable

with (1) less than 100 participants, (2)

Schedule G (Section 4977)

benchmarks by the end of the funding

an annual normal cost of less than

improvement period or a plan which is

$100,000, and (3) a funding deficiency

Tax on Excess Fringe Benefits

in critical status and either fails to meet

on August 17, 2006, will not incur the

the requirements of section 432 by the

If you made an election to be taxed

excise tax for an accumulated funding

end of the rehabilitation period or has

under section 4977 to continue your

deficiency if its employers participated

received a certification under section

nontaxable fringe benefit policy that

in a Federal Fishery Capacity

432(b)(3)(A)(ii) for 3 consecutive plan

was in existence on or after January 1,

Reduction Program and the Northeast

years that the plan is not making the

1984, check the “Yes” box on line 1 and

Fisheries Assistance Program.

scheduled progress in meeting its

complete lines 2 through 4.

Schedule E (Section 4971(f))

requirements under the rehabilitation

Line 3. The excess fringe benefits are

plan, shall be treated as having an

figured by subtracting 1% of the

Tax on Failure to Pay Liquidity

accumulated funding deficiency for the

aggregate compensation paid by you to

last plan year in such period (and each

Shortfall

your employees during the calendar

succeeding plan year until such

year that was includable in their gross

Section 4971(f)(1). If your plan has a

benchmarks or requirements are met).

income from the aggregate value of the

liquidity shortfall for which an excise tax

The accumulated funding deficiency is

nontaxable fringe benefits under

under section 4971(f)(1) is imposed for

an amount equal to the greater of the

sections 132(a)(1) and 132(a)(2).

any quarter of the plan year, complete

amount of the contributions necessary

lines 1 through 4.

to meet the benchmarks or

Schedule H (Section 4979)

Line 1. Include on line 1 the amount of

requirements or the amount of the

the liquidity shortfall(s) for each quarter

accumulated funding deficiency without

Tax on Excess Contributions to

of the plan year.

regard to this rule. The existence of an

Certain Plans

accumulated funding deficiency triggers

Line 2. Include on line 2 the amount of

Section 4979. Any employer who

the initial 5% excise tax under section

any contributions made to the plan by

maintains a plan described in section

4971(a). A plan is in endangered status

the due date of the required quarterly

401(a), 403(a), 403(b), 408(k), or

if:

installment(s) which partially corrected

•

501(c)(18) may be subject to an excise

the liquidity shortfall(s) reported on line

The plan’s actuary timely certifies

tax on the excess aggregate

that the plan is not in critical status for

contributions made on behalf of highly

that plan year and at the beginning of

Line 3. Include on line 3 the net

compensated employees. The

that plan year the plan’s funded

amount of the liquidity shortfall (subtract

employer may also be subject to an

percentage for plan year is less than 80

line 2 from line 1).

excise tax on the excess contributions

percent, or

Additional tax for failure to correct

to a cash or deferred arrangement

•

The plan has an accumulated

liquidity shortfall. If the plan has a

connected with the plan.

funding deficiency for the plan year or

liquidity shortfall as of the close of any

The tax is on the excess

is projected to have such an

quarter and as of the close of the

contributions and the excess aggregate

accumulated funding deficiency for any

following 4 quarters, an additional tax

contributions made to or on behalf of

of the 6 succeeding plan years, taking

will be imposed under section

the highly compensated employees (as

into account any extension of

4971(f)(2) equal to the amount on

defined in section 414(q)).

amortization periods under section

which tax was imposed by section

431(d).

A highly compensated employee

4971(f)(1) for such quarter. Report the

generally is an employee who:

A plan is in critical status if it is

additional tax on Part I, Section B, line

determined by the multiemployer plan’s

9b.

1. Was a 5-percent owner at any

actuary that one of the four formulas in

time during the year or the preceding

Schedule F (Section 4971(g))

section 432(b)(2) is met for the

year, or

applicable plan year.

For years beginning after 2007, Section

2. For the preceding year had

4971(g), which pertains to

compensation from the employer in

multiemployer plans, imposes an excise

All, or part, of this excise tax may be

excess of a dollar amount for the year

tax for failure to comply with a funding

waived under section 4971(g)(5).

($100,000 for 2006 and for 2007) and,

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Instructions For Form 5330 - Internal Revenue Service Page 10

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