Instructions For Form 5330 - Return Of Excise Taxes Related To Employee Benefit Plans
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13Department of the Treasury
Instructions for Form 5330
Internal Revenue Service
(Rev. April 2009)
Return of Excise Taxes Related to Employee Benefit Plans
•
Section references are to the Internal
an employer contributes to one or more
A minimum funding deficiency
Revenue Code unless otherwise noted.
defined contribution plans, the overall
(section 4971(a) and (b));
•
limit applicable to combinations of
A failure to pay liquidity shortfall
defined benefit plans and defined
(section 4971(f));
General Instructions
•
contribution plans only applies to the
A failure to comply with a funding
extent that the contributions exceed 6%
improvement or rehabilitation plan
Reminders
of the compensation otherwise paid or
(section 4971(g)(2));
•
accrued during the tax year to the
A failure to meet requirements for
Section 4965 — Prohibited Tax
beneficiaries under the defined
plans in endangered or critical status
Shelter Transactions. The Tax
contribution plans.
(section 4971(g)(3));
Increase Prevention and Reconciliation
•
A failure to adopt rehabilitation plan
For purposes of determining the
Act of 2005 provides that an entity
(section 4971(g)(4));
excise tax on nondeductible
manager of a tax-exempt organization
•
contributions, matching contributions to
Nondeductible contributions to
may be subject to an excise tax on
qualified plans (section 4972);
a defined contribution plan that are
prohibited tax shelter transactions
•
nondeductible solely because of the
Excess contributions to a section
under section 4965. In the case of a
overall deduction limit are disregarded.
403(b)(7)(A) custodial account (section
plan entity, an entity manager is any
In addition, where there is a
4973(a)(3));
person that approves or otherwise
•
combination of defined benefit and
causes the tax-exempt entity to be a
A prohibited transaction (section
defined contribution plans,
party to a prohibited tax shelter
4975);
•
multiemployer plans are not taken into
transaction. The excise tax is $20,000
A disqualified benefit provided by
consideration in applying the overall
and is assessed for each approval or
funded welfare plans (section 4976);
•
limit on deductions.
other act causing the organization to be
Excess fringe benefits (section
a party to the prohibited tax shelter
4977);
Section 4975 — Prohibited
•
transaction.
Transactions. Generally, for purposes
Certain employee stock ownership
of a prohibited transaction described in
plan (ESOP) dispositions (section
Section 4971 — Failure to Meet the
section 4975(c)(1)(A), (B), (C), or (D), if
4978);
Minimum Funding Standards.
•
a disqualified person enters into a
Excess contributions to plans with
Section 214 of the Pension Protection
prohibited transaction in connection
cash or deferred arrangements (section
Act of 2006 provides that, for certain
with the acquisition, holding, or
4979);
tax years, a multiemployer pension plan
•
disposition of certain securities or
with (1) less than 100 participants, (2)
Certain prohibited allocations of
commodities, and the transaction is
an annual normal cost of less than
qualified securities by an ESOP
corrected within the 14-day correction
$100,000, and (3) a funding deficiency
(section 4979A);
•
period, it will not be treated as a
on August 17, 2006, will not incur the
Reversions of qualified plan assets to
prohibited transaction and no tax will be
excise tax for an accumulated funding
employers (section 4980);
assessed.
•
deficiency under section 4971(a)(2) if
A failure of an applicable plan
the employers participated in a Federal
reducing future benefit accruals to
When calculating the prohibited
Fishery Capacity Reduction Program
satisfy notice requirements (section
transaction excise tax where there is a
and the Northeast Fisheries Assistance
4980F).
failure to transmit participant
Program.
contributions (elective deferrals) or
Who Must File
amounts that would have otherwise
Section 4971(g) — Multiemployer
been payable to the participant in cash,
Plans in Endangered or Critical
A Form 5330 must be filed by any of
the amount involved is based on
Status The Pension Protection Act of
the following.
interest on those elective deferrals. See
2006 states that a failure to comply with
1. A plan entity manager of a
Rev. Rul. 2006-38, 2006-29 I.R.B. 80,
a funding improvement or rehabilitation
tax-exempt entity who approves, or
available at
plan, a failure to meet requirements for
otherwise causes the entity to be party
2006-29_IRB/ar06.html.
plans in endangered or critical status,
to, a prohibited tax shelter transaction
or a failure to adopt a rehabilitation plan
Generally, the prohibited transaction
during the tax year and knows or has
may be subject to an excise tax.
rules of section 4975(c) will not apply to
reason to know the transaction is a
any transaction in connection with
prohibited tax shelter transaction under
Section 4972 — Nondeductible
investment advice, if the investment
section 4965(a)(2).
Contributions to Qualified Employer
advice provided by a fiduciary adviser is
2. An employer liable for the tax
Plans. The deduction limits of section
provided under an eligible investment
under section 4971 for failure to meet
404(a)(1)(D) were altered for certain tax
advice arrangement under Department
the minimum funding standards under
years beginning after December 31,
of Labor guidelines.
section 412 (liability for tax in the case
2005. The maximum deductible amount
of an employer who is a party to a
is not less than the excess of 150% of a
Purpose of Form
collective bargaining agreement). See
plan’s current liability in the instance of
section 413(b)(6).
a single-employer defined benefit plan
File Form 5330 to report the tax on:
•
(140% for multiemployer plans) over
A prohibited tax shelter transaction
3. An employer liable for the tax
the value of that plan’s assets. Where
(section 4965(a)(2));
under section 4971(f) for a failure to
Cat. No. 11871X
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