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Employee Plans Compliance Unit (EPCU) - Current Projects - IRC 401(k) Plans Reporting 4971(a) Tax

Why did I receive an EPCU Compliance Check Letter?

You filed a Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, indicating excise tax was owed under Internal Revenue Code (IRC) section 4971(a). The IRC Section 4971(a) excise tax is owed by plan sponsors whose plans are subject to the minimum funding requirement under IRC Section 412 but who also did not timely deposit the required minimum contributions. It appears you maintain a 401(k) plan, which is not subject to IRC Section 412, and accordingly, this excise tax may not be applicable.

What is the EPCU attempting to determine?

We want to determine whether the Form 5330 reporting excise tax under IRC section 4971(a) was appropriately filed (if the plan was not subject to the minimum funding requirements). We want to confirm the correct type and amount of excise tax that should have been reported on this return (Form 5330). If a different type of excise tax was owed, we want to determine if there is a discrepancy between the amount owed and the amount originally reported on the Form 5330.

What actions do I need to take?

Complete the Information Request and return it to the person whose information is shown on the cover letter via e-mail, fax or postal mail (please note the IRS cannot guarantee security for e-mail). You may also furnish any other documents or clarifying material you believe will be helpful for us to review.

Your response should confirm the type of plan (defined contribution or defined benefit), the correct plan number, the correct plan name, and the type of contributions (employee salary deferrals or employer contributions).  Verifying the accuracy of information reported on the filed Form 5330 will help us determine if an amended Form 5330 should be filed to reflect the appropriate excise tax and/or amount. Please make every effort to provide a complete, accurate, and timely response.

If You Have Questions

Please feel free to contact the person listed in the cover letter with questions about this project and how it relates to your situation.


A review of the Form 5330 return showed that excise tax was paid under IRC Section 4971(a) for late payment of required minimum contributions. The Form 5500 series return reports the plan contains a 401(k) feature and was not subject to the minimum funding requirements of IRC section 412.

The EPCU will be mailing the contact letter and Information Request to plan sponsors. A closing letter will be issued to the plan sponsor upon completion of our review.

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