Instructions for Form 5330 (4/2009)

Section 4965—Prohibited Tax Shelter Transactions. The Tax Increase Prevention and Reconciliation Act of 2005 provides that an entity manager of a tax-exempt organization may be subject to an excise tax on prohibited tax shelter transactions under section 4965. In the case of a plan entity, an entity manager is any person that approves or otherwise causes the tax-exempt entity to be a party to a prohibited tax shelter transaction. The excise tax is $20,000 and is assessed for each approval or other act causing the organization to be a party to the prohibited tax shelter transaction.

Section 4971—Failure to Meet the Minimum Funding Standards. Section 214 of the Pension Protection Act of 2006 provides that, for certain tax years, a multiemployer pension plan with (1) less than 100 participants, (2) an annual normal cost of less than $100,000, and (3) a funding deficiency on August 17, 2006, will not incur the excise tax for an accumulated funding deficiency under section 4971(a)(2) if the employers participated in a Federal Fishery Capacity Reduction Program and the Northeast Fisheries Assistance Program.

Section 4971(g)—Multiemployer Plans in Endangered or Critical Status The Pension Protection Act of 2006 states that a failure to comply with a funding improvement or rehabilitation plan, a failure to meet requirements for plans in endangered or critical status, or a failure to adopt a rehabilitation plan may be subject to an excise tax.

Section 4972—Nondeductible Contributions to Qualified Employer Plans. The deduction limits of section 404(a)(1)(D) were altered for certain tax years beginning after December 31, 2005. The maximum deductible amount is not less than the excess of 150% of a plan's current liability in the instance of a single-employer defined benefit plan (140% for multiemployer plans) over the value of that plan's assets. Where an employer contributes to one or more defined contribution plans, the overall limit applicable to combinations of defined benefit plans and defined contribution plans only applies to the extent that the contributions exceed 6% of the compensation otherwise paid or accrued during the tax year to the beneficiaries under the defined contribution plans.

For purposes of determining the excise tax on nondeductible contributions, matching contributions to a defined contribution plan that are nondeductible solely because of the overall deduction limit are disregarded. In addition, where there is a combination of defined benefit and defined contribution plans, multiemployer plans are not taken into consideration in applying the overall limit on deductions.

Section 4975—Prohibited Transactions. Generally, for purposes of a prohibited transaction described in section 4975(c)(1)(A), (B), (C), or (D), if a disqualified person enters into a prohibited transaction in connection with the acquisition, holding, or disposition of certain securities or commodities, and the transaction is corrected within the 14-day correction period, it will not be treated as a prohibited transaction and no tax will be assessed.

When calculating the prohibited transaction excise tax where there is a failure to transmit participant contributions (elective deferrals) or amounts that would have otherwise been payable to the participant in cash, the amount involved is based on interest on those elective deferrals. See Rev. Rul. 2006-38, 2006-29 I.R.B. 80, available at www.irs.gov/irb/2006-29_IRB/ar06.html.

Generally, the prohibited transaction rules of section 4975(c) will not apply to any transaction in connection with investment advice, if the investment advice provided by a fiduciary adviser is provided under an eligible investment advice arrangement under Department of Labor guidelines.

Purpose of Form

File Form 5330 to report the tax on:

A prohibited tax shelter transaction (section 4965(a)(2));
A minimum funding deficiency (section 4971(a) and (b));
A failure to pay liquidity shortfall (section 4971(f));
A failure to comply with a funding improvement or rehabilitation plan (section 4971(g)(2));
A failure to meet requirements for plans in endangered or critical status (section 4971(g)(3));
A failure to adopt rehabilitation plan (section 4971(g)(4));
Nondeductible contributions to qualified plans (section 4972);
Excess contributions to a section 403(b)(7)(A) custodial account (section 4973(a)(3));
A prohibited transaction (section 4975);
A disqualified benefit provided by funded welfare plans (section 4976);
Excess fringe benefits (section 4977);
Certain employee stock ownership plan (ESOP) dispositions (section 4978);
Excess contributions to plans with cash or deferred arrangements (section 4979);
Certain prohibited allocations of qualified securities by an ESOP (section 4979A);
Reversions of qualified plan assets to employers (section 4980);
A failure of an applicable plan reducing future benefit accruals to satisfy notice requirements (section 4980F).

Who Must File

A Form 5330 must be filed by any of the following.

A plan entity manager of a tax-exempt entity who approves, or otherwise causes the entity to be party to, a prohibited tax shelter transaction during the tax year and knows or has reason to know the transaction is a prohibited tax shelter transaction under section 4965(a)(2).
An employer liable for the tax under section 4971 for failure to meet the minimum funding standards under section 412 (liability for tax in the case of an employer who is a party to a collective bargaining agreement). See section 413(b)(6).
An employer liable for the tax under section 4971(f) for a failure to meet the liquidity requirement of section 412(m)(5).
An employer with respect to a multiemployer plan liable for the tax under section 4971(g)(2) for failure to comply with a funding improvement or rehabilitation plan under section 432.
An employer with respect to a multiemployer plan liable for the tax under section 4971(g)(3) for failure to meet the requirements for plans in endangered or critical status under section 432.
A multiemployer plan sponsor liable for the tax under section 4971(g)(4) for failure to adopt a rehabilitation plan within the time required under section 432.
An employer liable for the tax under section 4972 for nondeductible contributions to qualified plans.
An individual liable for the tax under section 4973(a)(3) because an excess contribution to a section 403(b)(7)(A) custodial account was made for them and that excess has not been eliminated, as specified in sections 4973(c)(2)(A) and (B).
A disqualified person liable for the tax under section 4975 for participating in a prohibited transaction (other than a fiduciary acting only as such), or an individual or his or her beneficiary who engages in a prohibited transaction with respect to his or her individual retirement account, unless section 408(e)(2)(A) or section 408(e)(4) applies, for each tax year or part of a tax year in the taxable period applicable to such prohibited transaction.
An employer liable for the tax under section 4976 for maintaining a funded welfare benefit plan that provides a disqualified benefit during any tax year.
An employer who pays excess fringe benefits and has elected to be taxed under section 4977 on such payments.
An employer or worker-owned cooperative, as defined in section 1042(c)(2), that maintains an employee stock ownership plan (ESOP) that disposes of the qualified securities, as defined in section 1042(c)(1), within the specified 3-year period (see section 4978).
An employer liable for the tax under section 4979 on excess contributions to plans with a cash or deferred arrangement, etc.
An employer or worker-owned cooperative that made the written statement described in section 664(g)(1)(E) or 1042(b)(3)(B) and made an allocation prohibited under section 409(n) of qualified securities of an ESOP taxable under section 4979A; or an employer or worker-owned cooperative who made an allocation of S corporation stock of an ESOP prohibited under section 409(p) taxable under section 4979A.
An employer who receives an employer reversion from a deferred compensation plan taxable under section 4980.
An employer or multiemployer plan liable for the tax under section 4980F for failure to give notice of a significant reduction in the rate of future benefit accrual.

A Form 5330 and tax payment is required for any of the following.

Each year you fail to meet the minimum funding standards under section 412 or you contribute an excess amount to your section 403(b)(7)(A) custodial account.
Each year any of the following under Who Must File, earlier, apply: (1), (3), (5), (6), (7), (9), (10), (11), (12), (13), (14), or (16).
Each failure of an employer to make the required contribution to a multiemployer plan, as required by a funding improvement or rehabilitation plan under section 432.
A reversion of plan assets from a qualified plan taxable under section 4980.
Each year or part of a year in the taxable period in which a prohibited transaction occurs under section 4975. See the instructions for Schedule C, line 2, columns (d) and (e), for a definition of “taxable period.”

When To File

File one Form 5330 to report all excise taxes with the same filing due date. However, if the taxes are from separate plans, file separate forms for each plan.

Generally, filing Form 5330 starts the statute of limitations running only with respect to the particular excise tax(es) reported on that Form 5330. However, statutes of limitations with respect to the prohibited transaction excise tax(es) are based on the filing of the applicable Form 5500.

Use Table 1 to determine the due date of Form 5330.

Extension. File Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, to request an extension of time to file. If approved, you may be granted an extension of up to 6 months after the normal due date of Form 5330.

Form 5558 does not extend the time to pay your taxes. See the instructions for Form 5558.

Table 1.

IF the taxes are due under section . . .	THEN file Form 5330 by the . . .
4965	15th day of the 5th month following the close of the entity manager's tax year during which the tax-exempt entity becomes a party to the transaction.
4971	last day of the 7th month after the end of the employer's tax year or 8½ months after the last day of the plan year that ends with or within the filer's tax year.
4971(f)	last day of the 7th month after the end of the employer's tax year or 8½ months after the last day of the plan year that ends with or within the filer's tax year.
4971(g)(2)	last day of the 7th month after the end of the employer's tax year or 8½ months after the last day of the plan year that ends with or within the filer's tax year.
4971(g)(3)	last day of the 7th month after the end of the employer's tax year or 8½ months after the last day of the plan year that ends with or within the filer's tax year.
4971(g)(4)	last day of the 7th month after the end of the employer's tax year or 8½ months after the last day of the plan year that ends with or within the filer's tax year.
4972	last day of the 7th month after the end of the tax year of the employer or other person who must file this return.
4973(a)(3)	last day of the 7th month after the end of the tax year of the employer or other person who must file this return.
4975	last day of the 7th month after the end of the tax year of the employer or other person who must file this return.
4976	last day of the 7th month after the end of the tax year of the employer or other person who must file this return.
4977	last day of the 7th month after the end of the calendar year in which the excess fringe benefits were paid to your employees.
4978	last day of the 7th month after the end of the tax year of the employer or other person who must file this return.
4979	last day of the 15th month after the close of the plan year to which the excess contributions or excess aggregate contributions relate.
4979A	last day of the 7th month after the end of the tax year of the employer or other person who must file this return.
4980	last day of the month following the month in which the reversion occurred.
4980F	last day of the month following the month in which the failure occurred.
If the filing due date falls on a Saturday, Sunday, or legal holiday, the return may be filed on the next business day.

Where To File

File Form 5330 at the following address:

Department of the Treasury
Internal Revenue Service
Ogden, UT 84201

Private delivery services. You can use certain private delivery services designated by the IRS to meet the “timely mailing as timely filing/paying” rule for tax returns and payments. These private delivery services include only the following:

DHL Express (DHL): DHL Same Day Service, DHL Next Day 10:30 a.m., DHL Next Day 12:00 p.m., DHL Next Day 3:00 p.m., DHL 2nd Day Service.
Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First.
United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express.

The private delivery service can tell you how to get written proof of the mailing date.

Interest and Penalties

Interest. Interest is charged on taxes not paid by the due date even if an extension of time to file is granted. Interest is also charged on penalties imposed from the due date, including extensions, to the date of payment for failure to file, negligence, fraud, gross valuation overstatements, and substantial understatements of tax. The interest rate is determined under section 6621.

Penalty for late filing of return. If you do not file a return by the due date, including extensions, you may have to pay a penalty of 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. The minimum penalty for a return that is more than 60 days late is the smaller of the tax due or $100. The penalty will not be imposed if you can show that the failure to file on time was due to reasonable cause. If you file late, you must attach a statement to Form 5330 explaining the reasonable cause.

Penalty for late payment of tax. If you do not pay the tax when due, you may have to pay a penalty of ½ of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. The penalty will not be imposed if you can show that the failure to pay on time was due to reasonable cause.

Interest and penalties for late filing and late payment will be billed separately after the return is filed.

Claim for Refund or Credit/Amended Return

File an amended Form 5330 for any of the following.

To claim a refund of overpaid taxes reportable on Form 5330.
To receive a credit for overpaid taxes.
To report additional taxes due within the same tax year of the filer if those taxes have the same due date as those previously reported. Check the box in item H of the Entity Section and report the correct amount of taxes on Schedule A through K, as appropriate, and on Part I, lines 1 through 16. See the instructions for Part II, lines 17 through 19.

If you file an amended return to claim a refund or credit, the claim must state in detail the reasons for claiming the refund. In order for the IRS to promptly consider your claim, you must provide the appropriate supporting evidence. See Regulations section 301.6402-2 for more details.

General Instructions

Reminders