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of representatives of the parties who

Welfare Plans. Section 4976 imposes

The section 4978 tax does not apply

establish or maintain the plan, if the

an excise tax on employers who

to a distribution of qualified securities or

plan is established or maintained jointly

maintain a funded welfare benefit plan

sale of such securities if any of the

by one or more employers and one or

that provides a disqualified benefit

following occurs:

•

more employee organizations, or by

during any tax year. The tax is 100% of

The death of the employee;

•

two or more employers.

the disqualified benefit.

The retirement of the employee after

the employee has reached age 59

;

Generally, a “disqualified benefit” is

•

Include the suite, room, or other unit

The disability of the employee (within

any of the following:

numbers after the street number. If the

the meaning of section 72(m)(7)); or

•

Any post-retirement medical benefit

•

Post Office does not deliver mail to the

The separation of the employee from

or life insurance benefit provided for a

street address and you have a P.O.

service for any period that results in a

key employee unless the benefit is

box, show the box number instead of

1-year break in service (as defined in

provided from a separate account

the street address.

section 411(a)(6)(A)).

established for the key employee under

Item D. Name of plan. Enter the

For purposes of section 4978, an

section 419A(d);

•

formal name of the plan, group

exchange of qualified securities in a

Any post-retirement medical benefit

insurance arrangement, or enough

reorganization described in section

or life insurance benefit unless the plan

information to identify the plan. This

368(a)(1) for stock of another

meets the nondiscrimination

should be the same name indicated on

corporation will not be treated as a

requirements of section 505(b) for

the Form 5500 series return/report filed

disposition.

those benefits; or

•

for the plan.

Any portion of the fund that reverts to

For section 4978 excise taxes,

Item E. Plan sponsor’s EIN. Enter the

the benefit of the employer.

the amount entered on Part I,

nine-digit EIN assigned to the plan

line 4a is the amount realized on

Enter on line 3, the total amount of

sponsor. This should be the same

the disposition of qualified securities

the disqualified benefit.

number used to file the Form 5500

multiplied by 10%. Also check the

Line 4a and 4b. Section 4978 and

series return/report.

appropriate box on line 4b.

4978A – Tax on Certain ESOP

Item F. Plan year ending. Plan year

Section 4978A does not apply to

Dispositions

means the calendar or fiscal year on

the estate of a person who died

which the records of the plan are kept.

Section 4978. Section 4978

after December 19, 1989.

CAUTION

Enter four digits in year-month order.

imposes an excise tax on dispositions

This number assists the IRS in properly

Section 4978A. This section

of securities acquired in a sale to which

identifying the plan and time period for

imposes a tax on certain transactions

section 1042 applied, or in a qualified

which the Form 5330 is being filed. For

involving qualified employer securities.

gratuitous transfer to which section

example, a plan year ended March 31,

Qualified employer securities for

664(g) applied, if the dispositions take

2004, should be shown as 0403.

purposes of this tax are defined in

place within 3 years after the date of

section 2057(d) as in effect prior to

the acquisition of qualified securities (as

Item G. Plan number. Enter the

December 19, 1989.

defined in section 1042(c)(1) or a

three-digit number that the employer or

section 664(g) transfer).

plan administrator assigned to the plan.

Section 4978A taxes any disposition

of qualified employer securities

The tax is 10% of the amount

Item H. Amended return. If you are

acquired on or before December 20,

realized on the disposition of the

filing an amended Form 5330, check

1989, if the disposition of the qualified

the box on this line, and see the

qualified securities if an ESOP or

securities takes place within 3 years

instructions for lines 13a through 13c.

eligible worker-owned cooperative (as

after the date the ESOP or eligible

Also see Claim for Refund or Credit/

defined in section 1042(c)(2)) disposes

worker-owned cooperative acquired the

Amended Return.

of the qualified securities within the

qualified securities.

3-year period described above, and

Filer’s signature. Please sign and

either of the following applies:

The section 4978A tax also applies

date the form. Also enter a daytime

•

The total number of shares held by

to dispositions of qualified securities

phone number where you can be

that plan or cooperative after the

that occur after the 3-year period if the

reached.

disposition is less than the total number

qualified securities were not allocated

Preparer’s signature. Anyone who

of employer securities held immediately

to participants’ accounts or the

prepares your return and does not

after the sale, or

proceeds from the disposition were not

•

charge you should not sign your return.

allocated to the participants’ accounts.

Except to the extent provided in

For example, a regular full-time

regulations, the value of qualified

For section 4978A excise taxes,

employee or your business partner who

securities held by the plan or

the amount entered on Part I,

prepares the return should not sign.

cooperative after the disposition is less

line 4a is 30% of the amount

Generally, anyone who is paid to

than 30% of the total value of all

realized on the disposition or 30% of

prepare a return must sign it and fill in

employer securities as of the

the amount repaid on the loan,

the Paid Preparer’s Use Only area.

disposition (60% of the total value of all

whichever applies. Also check the

employer securities in the case of any

The paid preparer must complete the

appropriate box on line 4b.

qualified employer securities acquired

required preparer information and —

Line 5. Section 4979A – Tax on

•

in a qualified gratuitous transfer to

Sign the return by hand, in the space

Certain Prohibited Allocations of

which section 664(g) applied).

provided for the preparer’s signature

Qualified ESOP Securities. For plan

(signature stamps and labels are not

See section 4978(b)(2) for the

years beginning before January 1,

acceptable).

limitation on the amount of tax.

2005, section 4979A imposes a 50%

•

Give a copy of the return to the filer.

tax of the allocated amounts involved

The section 4978 tax must be paid

in:

Part I — Summary of Taxes

by the employer or the eligible

worker-owned cooperative that made

1. An allocation described in

Due

the written statement described in

section 664(g)(5)(A). Section

Line 3. Section 4976 – Tax on

section 1042(b)(3)(B) on dispositions

664(g)(5)(A), prohibits any portion of

Disqualified Benefits for Funded

that occurred during their tax year.

the assets of the ESOP attributable to

-3-

Instructions For Form 5330 - Return Of Exange Taxes Related To Employee Benefit Plans Page 3

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