Instructions For Form 5330 (Rev. 2013) (Page 4 of 13) in pdf

Preparer's Use Only area. See section

employer securities as of the disposition

shareholder of the employer maintaining

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

(60% of the total value of all employer

the plan.

securities in the case of any qualified

In addition to signing and completing

3. The accrual or allocation of S

employer securities acquired in a

the required information, the paid

corporation shares in an ESOP during a

qualified gratuitous transfer to which

preparer must give a copy of the

nonallocation year constituting a

section 664(g) applied).

completed return to the taxpayer.

prohibited allocation under section

See section 4978(b)(2) for the

409(p).

Note. A paid preparer may sign original

limitation on the amount of tax.

4. A synthetic equity owned by a

or amended returns by rubber stamp,

The section 4978 tax must be paid by

disqualified person in any nonallocation

mechanical device, or computer

the employer or the eligible

year.

software program.

worker-owned cooperative that made

Prohibited allocations for ESOP

the written statement described in

Part I. Taxes

or worker-owned cooperative. For

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

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

that occurred during their tax year.

Line 4. Enter the total amount of the

“prohibited allocation of qualified

disqualified benefit under section 4976.

The section 4978 tax does not apply

securities by any ESOP or eligible

Section 4976 imposes an excise tax on

to a distribution of qualified securities or

worker-owned cooperative” is any

employers who maintain a funded

sale of such securities if any of the

allocation of qualified securities

welfare benefit plan that provides a

following occurs.

acquired in a nonrecognition-of-gain

disqualified benefit during any tax year.

The death of the employee.

sale under section 1042, which violates

The tax is 100% of the disqualified

The retirement of the employee after

section 409(n), and any benefit that

benefit.

the employee has reached age 59

accrues to any person in violation of

Generally, a disqualified benefit is

The disability of the employee (within

section 409(n).

any of the following.

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

Under section 409(n), an ESOP or

Any post-retirement medical benefit

The separation of the employee from

worker-owned cooperative cannot allow

or life insurance benefit provided for a

service for any period that results in a

any portion of assets attributable to

key employee unless the benefit is

1-year break in service, as defined in

employer securities acquired in a

provided from a separate account

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

section 1042 sale to accrue or be

established for the key employee under

For purposes of section 4978, an

allocated, directly or indirectly, to the

section 419A(d).

exchange of qualified securities in a

taxpayer, or any person related to the

Any post-retirement medical benefit

reorganization described in section

taxpayer, involved in the transaction

or life insurance benefit unless the plan

368(a)(1) for stock of another

during the nonallocation period. For

meets the nondiscrimination

corporation will not be treated as a

purposes of section 409(n),

requirements of section 505(b) for those

disposition.

“relationship to the taxpayer” is defined

benefits.

under section 267(b).

For section 4978 excise taxes,

Any portion of the fund that reverts to

The nonallocation period is the

the amount entered in Part I,

the benefit of the employer.

period beginning on the date the

line 5a is the amount realized

Lines 5a and 5b. Section 4978

qualified securities are sold and ending

on the disposition of qualified securities,

imposes an excise tax on the sale or

on the later of:

multiplied by 10%. Also check the

transfer of securities acquired in a sale

10 years after the date of sale, or

appropriate box on line 5b.

or qualified gratuitous transfer to which

The date on which the final payment

section 1042 or section 664(g) applied,

Line 6. Section 4979A imposes a 50%

is made if acquisition indebtedness was

respectively, if the sale or transfer takes

excise tax on allocated amounts

incurred at the time of sale.

place within 3 years after the date of the

involved in any of the following.

The employer sponsoring the plan or

acquisition of qualified securities, as

1. A prohibited allocation of qualified

the eligible worker-owned cooperative is

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

securities by any ESOP or eligible

responsible for paying the tax.

section 664(g) transfer.

worker-owned cooperative.

Generally, the prohibited

The tax is 10% of the amount

2. A prohibited allocation described

allocation rules for securities in

realized on the disposition of the

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

an S corporation are effective

qualified securities if an ESOP or

CAUTION

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

for plan years beginning after December

eligible worker-owned cooperative, as

assets of the ESOP attributable to

31, 2004; however, these rules are

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

securities acquired by the plan in a

effective for plan years ending after

of the qualified securities within the

qualified gratuitous transfer to be

March 14, 2001, if:

3-year period described above, and

allocated to the account of:

The ESOP was established after

either of the following applies:

a. Any person related to the

March 14, 2001; or

The total number of shares held by

decedent within the meaning of section

The ESOP was established on or

that plan or cooperative after the

267(b) or a member of the decedent's

before March 14, 2001, and the

disposition is less than the total number

family within the meaning of section

employer maintaining the plan was not

of employer securities held immediately

2032A(e)(2), or

an S corporation.

after the sale, or

b. Any person who, at the time of

Except to the extent provided in

Prohibited allocations of

the allocation or at any time during the

regulations, the value of qualified

securities in an S corporation. For

1-year period ending on the date of the

securities held by the plan or

purposes of items (3) and (4), under

acquisition of qualified employer

cooperative after the disposition is less

Line 6, earlier, the excise tax on these

securities by the plan, is a 5%

than 30% of the total value of all

transactions under section 4979A is

-4-

Instructions For Form 5330 (Rev. 2013) Page 4

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