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by one or more employers and one or

preparer must give a copy of the

worker-owned cooperative that made

more employee organizations, or by

completed return to the taxpayer.

the written statement described in

two or more employers.

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

Note. A paid preparer may sign

that occurred during their tax year.

original or amended returns by rubber

Include the suite, room, or other unit

stamp, mechanical device, or computer

The section 4978 tax does not apply

numbers after the street number. If the

software program.

to a distribution of qualified securities or

post office does not deliver mail to the

sale of such securities if any of the

street address and you have a P.O.

Part I. Taxes

following occurs.

•

box, show the box number instead of

The death of the employee.

•

the street address.

Line 4. Enter the total amount of the

The retirement of the employee after

disqualified benefit under section 4976.

the employee has reached age 59

If the plan has a foreign address,

•

Section 4976 imposes an excise tax on

The disability of the employee (within

enter the information in the following

employers who maintain a funded

the meaning of section 72(m)(7)).

order: city or town, province or state,

•

welfare benefit plan that provides a

The separation of the employee from

and country. Follow the country’s

disqualified benefit during any tax year.

service for any period that results in a

practice for entering the postal code.

The tax is 100% of the disqualified

1-year break in service, as defined in

Do not abbreviate the country name.

benefit.

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

Item E. Plan sponsor’s EIN. Enter

Generally, a disqualified benefit is

For purposes of section 4978, an

the nine-digit EIN assigned to the plan

any of the following.

exchange of qualified securities in a

sponsor. This should be the same

•

Any post-retirement medical benefit

reorganization described in section

number used to file the Form 5500

or life insurance benefit provided for a

368(a)(1) for stock of another

series return/report.

key employee unless the benefit is

corporation will not be treated as a

Item F. Plan year ending. “Plan year”

provided from a separate account

disposition.

means the calendar or fiscal year on

established for the key employee under

For section 4978 excise taxes,

which the records of the plan are kept.

section 419A(d).

•

the amount entered in Part I,

Enter eight digits in month/date/year

Any post-retirement medical benefit

line 5a is the amount realized on

order. This number assists the IRS in

or life insurance benefit unless the plan

the disposition of qualified securities,

properly identifying the plan and time

meets the nondiscrimination

multiplied by 10%. Also check the

period for which the Form 5330 is being

requirements of section 505(b) for

appropriate box on line 5b.

filed. For example, a plan year ending

those benefits.

•

March 31, 2007, should be shown as

Line 6. Section 4979A imposes a 50%

Any portion of the fund that reverts to

03/31/2007.

excise tax on allocated amounts

the benefit of the employer.

involved in any of the following.

Item G. Plan number. Enter the

Lines 5a and 5b. Section 4978

three-digit number that the employer or

1. A prohibited allocation of qualified

imposes an excise tax on the sale or

securities by any ESOP or eligible

plan administrator assigned to the plan.

transfer of securities acquired in a sale

worker-owned cooperative.

This three-digit number is used with the

or qualified gratuitous transfer to which

2. A prohibited allocation described

EIN entered on line B and is used by

section 1042 or section 664(g) applied,

the IRS, the Department of Labor, and

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

respectively, if the sale or transfer takes

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

the Pension Benefit Guaranty

place within 3 years after the date of

assets of the ESOP attributable to

Corporation as a unique 12-digit

the acquisition of qualified securities, as

securities acquired by the plan in a

number to identify the plan.

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

qualified gratuitous transfer to be

section 664(g) transfer.

If the plan number is not

allocated to the account of:

The tax is 10% of the amount

provided, this will cause a delay

a. Any person related to the

realized on the disposition of the

in processing your return.

CAUTION

decedent within the meaning of section

qualified securities if an ESOP or

267(b) or a member of the decedent’s

Item H. Amended return. If you are

eligible worker-owned cooperative, as

family within the meaning of section

filing an amended Form 5330, check

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

2032A(e)(2), or

the box on this line, and see the

of the qualified securities within the

b. Any person who, at the time of

instructions for Part II, lines 17 through

3-year period described above, and

the allocation or at any time during the

19. Also see Claim for Refund or

either of the following applies:

•

1-year period ending on the date of the

Credit/Amended Return, earlier.

The total number of shares held by

acquisition of qualified employer

that plan or cooperative after the

Filer’s signature. To reduce the

securities by the plan, is a 5%

disposition is less than the total number

possibility of correspondence and

shareholder of the employer

of employer securities held immediately

penalties, please sign and date the

maintaining the plan.

after the sale, or

form. Also enter a daytime phone

•

3. The accrual or allocation of S

Except to the extent provided in

number where you can be reached.

corporation shares in an ESOP during

regulations, the value of qualified

Preparer’s signature. Anyone who

a nonallocation year constituting a

securities held by the plan or

prepares your return and does not

prohibited allocation under section

cooperative after the disposition is less

charge you should not sign your return.

409(p).

than 30% of the total value of all

For example, a regular full-time

4. A synthetic equity owned by a

employer securities as of the

employee or your business partner who

disqualified person in any nonallocation

disposition (60% of the total value of all

prepares the return should not sign.

year.

employer securities in the case of any

qualified employer securities acquired

Generally, anyone who is paid to

Prohibited allocations for ESOP or

in a qualified gratuitous transfer to

prepare the return must sign the return

worker-owned cooperative. For

which section 664(g) applied).

in the space provided and fill in the

purposes of items (1) and (2) above, a

Paid Preparer’s Use Only area. See

See section 4978(b)(2) for the

“prohibited allocation of qualified

section 7701(a)(36)(B) for exceptions.

limitation on the amount of tax.

securities by any ESOP or eligible

In addition to signing and completing

The section 4978 tax must be paid

worker-owned cooperative” is any

the required information, the paid

by the employer or the eligible

allocation of qualified securities

-4-

Instructions For Form 5330 - Return Of Excise Taxes Related To Employee Benefit Plans Page 4

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