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the box on line 24a to show which tax

Table 1. Maximum Exclusion

Table 3. Limit on Annual Additions

you are reporting.

Allowance

(Years After December 31, 2001)

Section 4978 imposes an excise

1. Enter your includible

tax on dispositions of securities

compensation* . . . . . . . . . . 1.

compensation for your

acquired in a sale to which section

most recent year of

1042 applied or in a qualified gratuitous

2. Percentage limit . . . . . . . . . . 2.

20%

service* . . . . . . . . . . . . . .

transfer to which section 664(g)

3. Multiply line 1 by line 2 . . . . . 3.

applied, if the dispositions take place

2. Maximum . . . . . . . . . . . . .

2.$40,000

within 3 years after the date of the

4. Enter your years of service*

3. Enter the lesser of line 1 or

acquisition of the qualified securities (as

at the end of the tax year . . . . 4.

line 2. This is your limit on

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

annual additions. Enter this

5. Multiply line 3 by line 4 . . . . . 5.

section 664(g) transfer).

amount on line 15, Part III . .

6. Enter your amounts

The tax is 10% of the amount

*For more information, see Publication 571 for the

previously excludable**

year the excess contribution is being calculated.

realized on the disposition of the

(prior year’s contributions) . . . 6.

qualified securities if an ESOP or

7. Subtract line 6 from line 5.

eligible worker-owned cooperative (as

This is your maximum

Note. The $40,000 limitation in

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

exclusion allowance . . . . . . 7.

effect under section 415(c)(1)(A) is

of the qualified securities within the

*For more information, see Publication 571 for the

subject to changes in the cost-of-living

3-year period described above, and

year the excess contribution is being calculated.

as described in section 415(d).

either of the following applies:

**Amounts previously excludable were not

•

Currently, the dollar limit for a calendar

The total number of shares held by

required in 2001 to determine your maximum

year as adjusted annually for

that plan or cooperative after the

exclusion allowance.

cost-of-living increases is published

disposition is less than the total number

during the fourth quarter of the prior

of employer securities held immediately

Step 2. Figure your limit on annual

calendar year in the Internal Revenue

after the sale, or

additions using Table 2. Generally, for

•

Bulletin.

Except to the extent provided in

years prior to January 1, 2002, your

regulations, the value of qualified

limit on annual additions is figured as

Part IV (Section 4976)

securities held by the plan or

indicated below. However, if you were

cooperative after the disposition is less

an employee of an educational

Tax on Disqualified Benefits for

than 30% of the total value of all

organization, hospital, home health

Funded Welfare Plans

employer securities as of the

service agency, a health and welfare

disposition (60% of the total value of all

Section 4976 imposes an excise tax on

service agency or a church, convention

employer securities in the case of any

employers who maintain a funded

or association of churches, or an

qualified employer securities acquired

welfare benefit plan that provides a

organization described in section

in a qualified gratuitous transfer to

disqualified benefit during any tax year.

414(e)(3)(B)(ii), you may be eligible to

which section 664(g) applied).

The tax is 100% of the disqualified

figure your limit on annual additions

See section 4978(b)(2) for the

benefit.

using an alternative method. For more

limitation on the amount of tax.

information, see Publication 571 for the

Generally, a “disqualified benefit” is

The section 4978 tax must be paid

year the excess contribution is being

any of the following:

by the employer or the eligible

calculated.

•

Any post-retirement medical benefit

worker-owned cooperative that made

or life insurance benefit provided for a

Table 2. Limit on Annual Additions

the written statement described in

key employee unless the benefit is

(Years Before January 1, 2002)

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

provided from a separate account

that occurred during their tax year.

established for the key employee under

1. Enter your compensation*

The section 4978 tax does not apply

section 419A(d);

•

to a distribution of qualified securities or

Any post-retirement medical or life

2. Compensation limit . . . . . . .

25%

sale of such securities if any of the

insurance benefit unless the plan meets

3. Multiply line 1 by line 2 . . . .

following occurs:

the nondiscrimination requirements of

•

The death of the employee;

section 505(b) for those benefits; or

Maximum:

•

The retirement of the employee after

For 2001, enter $35,000

Any portion of the fund that reverts to

•

the employee has reached age 59

;

the benefit of the employer.

For 1994 through 2000,

•

The disability of the employee (within

enter $30,000 . . . . . . . . .

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

Part V (Sections 4978, 4978A

5. Enter the lesser of lines 3 or

•

The separation of the employee from

4. This is your limit on

and 4978B)

service for any period that results in a

annual additions . . . . . . . .

1-year break in service (as defined in

Tax on Certain ESOP

*For more information, see Publication 571 for the

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

year the excess contribution is being calculated.

Dispositions

For purposes of section 4978, an

exchange of qualified securities in a

Caution. Section 4978A does not

Step 3. Enter the smaller of the

reorganization described in section

apply to the estate of a person who

368(a)(1) for stock of another

amounts from Step 1, line 7, or Step 2,

died after December 19, 1989. Section

line 5, on line 15, Part III.

corporation will not be treated as a

4978B does not apply to the disposition

disposition.

of employer securities to which former

Years After December 31, 2001

section 133 applied which are acquired

Section 4978A imposes a tax on

by loans after August 20, 1996, or to

For years after December 31, 2001, the

certain transactions involving qualified

the refinancing of such loans after

amount excludable is the section 415(c)

employer securities. Qualified employer

August 20, 1996.

amount (limit on annual additions).

securities for purposes of this tax are

Figure the amount to enter on line 15

Line 24a. Report the section 4978 or

defined in section 2057(d) as in effect

using Table 3.

section 4978A tax on line 24a. Check

prior to December 19, 1989.

-4-

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

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