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                                                                                                      Department of the Treasury
                                                                                                      Internal Revenue Service
Instructions for Form 5330

(Rev. December 2021)
Return of Excise Taxes Related to Employee Benefit Plans

Section references are to the Internal Revenue • Certain prohibited allocations of        been eliminated, as specified in 
Code unless otherwise noted.                   qualified securities by an ESOP (section   sections 4973(c)(2)(A) and (B).
                                               4979A);                                    9. A disqualified person liable for the 
Future Developments                            • Reversions of qualified plan assets to   tax under section 4975 for participating 
For the latest information about               employers (section 4980); and              in a prohibited transaction (other than a 
developments related to Form 5330 and          • A failure of an applicable plan          fiduciary acting only as such), or an 
its instructions, such as legislation          reducing future benefit accruals to        individual or his or her beneficiary who 
enacted after they were published, go to       satisfy notice requirements (section       engages in a prohibited transaction with 
IRS.gov/Form5330.                              4980F).                                    respect to his or her individual 
                                               Who Must File                              retirement account, unless section 
                                                                                          408(e)(2)(A) or section 408(e)(4) 
What’s New                                     A Form 5330 must be filed by any of the    applies, for each tax year or part of a tax 
Filing deadline for section 4971 ex-           following.                                 year in the taxable period applicable to 
cise taxes.  The filing due date for             1. A plan entity manager of a            such prohibited transaction.
section 4971 taxes is changed to the           tax-exempt entity who approves, or         10. An employer liable for the tax 
15th day of the 10th month after the last      otherwise causes the entity to be party    under section 4976 for maintaining a 
day of the plan year.                          to, a prohibited tax shelter transaction   funded welfare benefit plan that 
                                               during the tax year and knows or has 
Electronic filing expected to be                                                          provides a disqualified benefit during 
                                               reason to know the transaction is a 
available in 2022. Electronic filing of                                                   any tax year.
                                               prohibited tax shelter transaction under 
Form 5330 is expected to be available                                                     11. An employer who pays excess 
                                               section 4965(a)(2).
in 2022, and the IRS will announce the                                                    fringe benefits and has elected to be 
specific date of availability when the           2. An employer liable for the tax        taxed under section 4977 on such 
programming comes online.                      under section 4971 for failure to meet     payments.
                                               the minimum funding standards under 
                                               section 412.                               12. An employer or worker-owned 
                                                                                          cooperative, as defined in section 
General Instructions                             3. An employer liable for the tax        1042(c)(2), that maintains an employee 
                                               under section 4971(f) for a failure to     stock ownership plan (ESOP) that 
Purpose of Form                                meet the liquidity requirement of section  disposes of the qualified securities, as 
File Form 5330 to report the tax on:           430(j) (or section 412(m)(5) as it existed defined in section 1042(c)(1), within the 
• A prohibited tax shelter transaction         prior to amendment by the Pension          specified 3-year period (see section 
(section 4965(a)(2));                          Protection Act of 2006 (PPA '06)), for     4978).
• A minimum funding deficiency                 plans with delayed effective dates under 
(section 4971(a) and (b));                     PPA '06.                                   13. An employer liable for the tax 
• A failure to pay liquidity shortfall                                                    under section 4979 on excess 
(section 4971(f));                               4. An employer with respect to a         contributions to plans with a cash or 
• A failure to comply with a funding           multiemployer plan liable for the tax      deferred arrangement, etc.
improvement or rehabilitation plan             under section 4971(g)(2) for failure to 
(section 4971(g)(2));                          comply with a funding improvement or       14. An employer or worker-owned 
• A failure to meet requirements for           rehabilitation plan under section 432.     cooperative that made the written 
                                                                                          statement described in section
plans in endangered or critical status           5. An employer with respect to a         664(g)(1)(E) or 1042(b)(3)(B) and made 
(section 4971(g)(3));                          multiemployer plan liable for the tax      an allocation prohibited under section 
• A failure to adopt rehabilitation plan       under section 4971(g)(3) for failure to    409(n) of qualified securities of an 
(section 4971(g)(4));                          meet the requirements for plans in         ESOP taxable under section 4979A; or, 
• Nondeductible contributions to               endangered or critical status under        an employer or worker-owned 
qualified plans (section 4972);                section 432.                               cooperative who made an allocation of 
• Excess contributions to a section              6. A multiemployer plan sponsor          S corporation stock of an ESOP 
403(b)(7)(A) custodial account (section        liable for the tax under section           prohibited under section 409(p) taxable 
4973(a)(3));                                   4971(g)(4) for failure to adopt a          under section 4979A.
• A prohibited transaction (section            rehabilitation plan within the time        15. An employer who receives an 
4975);                                         required under section 432.                employer reversion from a deferred 
• A disqualified benefit provided by             7. An employer liable for the tax        compensation plan taxable under 
funded welfare plans (section 4976);           under section 4972 for nondeductible       section 4980.
• Excess fringe benefits (section 4977);       contributions to qualified plans.          16. An employer or multiemployer 
• Certain employee stock ownership 
plan (ESOP) dispositions (section                8. An individual liable for the tax      plan liable for the tax under section 
4978);                                         under section 4973(a)(3) because an        4980F for failure to give notice of a 
• Excess contributions to plans with           excess contribution to a section           significant reduction in the rate of future 
cash or deferred arrangements (section         403(b)(7)(A) custodial account was         benefit accrual.
4979);                                         made for them and that excess has not 

Dec 22, 2021                                              Cat. No. 11871X

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  A Form 5330 and tax payment is                Table 1. Excise Tax Due Dates
required for any of the following.
• Each year any of the following under          IF the taxes are due 
Who Must File, earlier, apply: (1), (2),        under section . . .     THEN file Form 5330 by the . . .
(3), (5), (6), (7), (8), (9), (10), (11), (12), 
(13), (14), or (16).                                                    15th day of the 5th month following the close of the entity 
• Each failure of an employer to make                                   manager's tax year during which the tax-exempt entity becomes a 
the required contribution to a                  4965                    party to the transaction.
multiemployer plan, as required by a            4971                    15th day of the 10th month after the last day of the plan year.
funding improvement or rehabilitation 
plan under section 432.                         4971(f)                 15th day of the 10th month after the last day of the plan year.
• A reversion of plan assets from a             4971(g)(2)              15th day of the 10th month after the last day of the plan year.
qualified plan taxable under section 
4980.                                           4971(g)(3)              15th day of the 10th month after the last day of the plan year.
• Each year or part of a year in the            4971(g)(4)              15th day of the 10th month after the last day of the plan year.
taxable period in which a prohibited 
                                                4972                    last day of the 7th month after the end of the tax year of the 
transaction occurs under section 4975. 
                                                                        employer or other person who must file this return.
See the instructions for Schedule C, 
line 2, columns (d) and (e), for a              4973(a)(3)              last day of the 7th month after the end of the tax year of the 
definition of “taxable period.”                                         individual who must file this return.
When To File                                    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.
File one Form 5330 to report all excise 
taxes with the same filing due date.            4976                    last day of the 7th month after the end of the tax year of the 
However, if the taxes are from separate                                 employer or other person who must file this return.
plans, file separate forms for each plan.       4977                    last day of the 7th month after the end of the calendar year in 
  Generally, filing Form 5330 starts the                                which the excess fringe benefits were paid to your employees.
statute of limitations running only with        4978                    last day of the 7th month after the end of the tax year of the 
respect to the particular excise tax(es)                                employer or other person who must file this return.
reported on that Form 5330. However, 
                                                4979                    last day of the 15th month after the close of the plan year to which 
statutes of limitations with respect to the 
                                                                        the excess contributions or excess aggregate contributions relate.
prohibited transaction excise tax(es) are 
based on the filing of the applicable           4979A                   last day of the 7th month after the end of the tax year of the 
Form 5500, Annual Return/Report of                                      employer or other person who must file this return.
Employee Benefit Plan.                          4980                    last day of the month following the month in which the reversion 
  Use Table 1 to determine the due                                      occurred.
date of Form 5330.                              4980F                   last day of the month following the month in which the failure 
Extension. File Form 5558, Application                                  occurred.
for Extension of Time To File Certain           If the filing due date falls on a Saturday, Sunday, or legal holiday, the return may be filed on the next 
Employee Plan Returns, to request an            business day.
extension of time to file. If approved, you 
may be granted an extension of up to 6 
months after the normal due date of                                                                Private delivery services cannot 
                                                Where To File
Form 5330.                                                                                       ! deliver items to P.O. boxes. You 
        Form 5558 does not extend the                 File the paper Form 5330 at the   CAUTION    must use the U.S. Postal 
                                                      following address:                Service to mail any item to an IRS P.O. 
CAUTION instructions for Form 5558.
  !     time to pay your taxes. See the                                                 box address.
                                                Department of the Treasury
                                                Internal Revenue Service Center
How To File                                     Ogden, UT 84201                         Interest and Penalties
Paper forms for filing. Form 5330 can                                                   Interest.       We are required by law to 
be filed on paper. You can obtain the                                                   charge interest when you do not pay 
official IRS printed Form 5330 found on         Private delivery services (PDSs).       your liability on time. Generally, we 
the IRS website and download it to your         You can use certain private delivery    calculate interest on any unpaid balance 
computer to print and sign before               services (PDSs) designated by the IRS   from the due date of your return 
mailing to the address specified in these       to meet the “timely mailing as timely   (regardless of extensions of time to file) 
instructions. See Where To File below.          filing/paying” rule for tax returns and until you pay the amount you owe in full, 
You can complete paper Form 5330 by             payments. Go to IRS.gov/PDS for the     including accrued interest and any 
hand with pen or typewriter using only          current list of designated services.    penalty charges. Interest on some 
blue or black ink. Entries should not           The PDS can tell you how to get         penalties accrues on any unpaid 
exceed the lines provided on the form.          written proof of the mailing date.      balance from the date we notify you of 
                                                                                        the penalty until it is paid in full. Interest 
You can find Form 5330 and its                  For the IRS mailing address to use if   on other penalties, such as failure to file 
instructions by visiting the IRS Internet       you're using a PDS, go to IRS.gov/      a tax return, starts from the due date or 
website at IRS.gov/FormsPubs.                   PDSstreetAddresses.                     extended due date of the return. Interest 

                                                                    -2-                                      Instructions for Form 5330

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rates are variable and may change employer, individual, or other entity who employee organizations, or by two or
quarterly. (See section 6601.) is liable for the tax. more employers.
Penalty for late filing of return. If you Include the suite, room, or other unit Include the suite, room, or other unit
do not file a return by the due date, number after the street number. If the number after the street number. If the
including extensions, you may have to post office does not deliver mail to the post office does not deliver mail to the
pay a penalty of 5% of the unpaid tax for street address and you have a P.O. box, street address and you have a P.O. box,
each month or part of a month the return show the box number instead of the show the box number instead of the
is late, up to a maximum of 25% of the street address. street address.
unpaid tax. The penalty will not be If the plan has a foreign address, If the plan has a foreign address,
imposed if you can show that the failure enter the information in the following enter the information in the following
to file on time was due to reasonable order: city or town, state or province, order: city or town, state or province,
cause. If you file late, you may attach a country, and ZIP or foreign postal code. and country. Follow the country's
statement to Form 5330 explaining the Follow the country's practice for practice for entering the postal code. Do
reasonable cause. entering the postal code. Do not not abbreviate the country name.
Penalty for late payment of tax. If abbreviate the country name.
Item E. Plan sponsor's EIN. Enter the
you do not pay the tax when due, you Item B. Filer's identifying number. nine-digit EIN assigned to the plan
may have to pay a penalty of / of 1% 1 2 Enter the filer's identifying number in the sponsor. This should be the same
of the unpaid tax for each month or part appropriate section. The filer's number used to file the Form 5500
of a month the tax is not paid, up to a identifying number is either the filer's series return/report.
maximum of 25% of the unpaid tax. The employer identification number (EIN) or
penalty will not be imposed if you can the filer's social security number (SSN), Item F. Plan year ending. “Plan year”
show that the failure to pay on time was but not both. The identifying number of means the calendar or fiscal year on
due to reasonable cause. an individual, other than a sole which the records of the plan are kept.
Interest and penalties for late filing proprietor with an EIN, is his or her SSN. Enter eight digits in month/date/year
and late payment will be billed The identifying number for all other filers order. This number assists the IRS in
separately after the return is filed. is their EIN. The EIN is the nine-digit properly identifying the plan and time
number assigned to the plan sponsor/ period for which Form 5330 is being
Claim for Refund or Credit/ employer, entity, or individual on whom filed. For example, a plan year ending
Amended Return the tax is imposed. March 31, 2020, should be shown as
03/31/2020.
File an amended Form 5330 for any of Item C. Name of plan. Enter the
the following. formal name of the plan, name of the Item G. Plan number. Enter the
• To claim a refund of overpaid taxes plan sponsor, or name of the insurance three-digit number that the employer or
reportable on Form 5330. company or financial institution of the plan administrator assigned to the plan.
• To receive a credit for overpaid taxes. direct filing entity (DFE). In the case of a This three-digit number is used with the
• To report additional taxes due within group insurance arrangement (GIA), EIN entered on item B and is used by
the same tax year of the filer if those enter the name of the trust or other the IRS, the Department of Labor, and
taxes have the same due date as those entity that holds the insurance contract. the Pension Benefit Guaranty
previously reported. Check the box in In the case of a master trust investment Corporation as a unique 12-digit
item H of the Entity Section and report account (MTIA), enter the name of the number to identify the plan.
the correct amount of taxes on sponsoring employers. If the plan number is not
If the plan covers only the employees
Schedule A through K, as appropriate, ! provided, this will cause a delay
and on Part I, lines 1 through 16. See CAUTION in processing your return.
of one employer, enter the employer's
the instructions for Part II, lines 17
name or enough information to identify
through 19. Item H. Amended return. If you are
the plan. This should be the same name
If you file an amended return to claim indicated on the Form 5500 series filing an amended Form 5330, check the
a refund or credit, the claim must state return/report if that form is required to be box on this line, and see the instructions
in detail the reasons for claiming the filed for the plan. for Part II, lines 17 through 19. Also, see
Claim for Refund or Credit/Amended
refund. In order for the IRS to promptly Item D. Name and address of plan Return, earlier.
consider your claim, you must provide sponsor. The term “plan sponsor”
the appropriate supporting evidence. means: Filer's signature. To reduce the
See Regulations section 301.6402-2 for 1. The employer, for an employee possibility of correspondence and
more details. benefit plan established or maintained penalties, please sign and date the
by a single employer. form. Also, enter a daytime phone
number where you can be reached.
Specific Instructions 2. The employee organization, in
Filer tax year. Enter the tax year of the the case of a plan of an employee Preparer's signature. Anyone who
employer, entity, or individual on whom organization. prepares your return and does not
charge you should not sign your return.
the tax is imposed by using the plan 3. The association, committee, joint
For example, a regular full-time
year beginning and ending dates board of trustees, or other similar group
employee or your business partner who
entered in Part I of Form 5500 or by of representatives of the parties who
prepares the return should not sign.
using the tax year of the business return establish or maintain the plan, if the plan
filed. is established or maintained jointly by Generally, anyone who is paid to
one or more employers and one or more prepare the return must sign the return
Item A. Name and address of filer. in the space provided and fill in the Paid
Enter the name and address of the

Instructions for Form 5330 -3-

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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.
In addition to signing and completing securities in the case of any qualified 3. The accrual or allocation of S
the required information, the paid employer securities acquired in a corporation shares in an ESOP during a
preparer must give a copy of the qualified gratuitous transfer to which nonallocation year constituting a
completed return to the taxpayer. section 664(g) applied). prohibited allocation under section
See section 4978(b)(2) for the 409(p).
Note. If Form 5330 is filed on paper, a limitation on the amount of tax. 4. A synthetic equity owned by a
paid preparer may sign original or The section 4978 tax must be paid by disqualified person in any nonallocation
amended returns by rubber stamp, the employer or the eligible year.
mechanical device, or computer worker-owned cooperative that made
software program. the written statement described in Prohibited allocations for ESOP
section 1042(b)(3)(B) on dispositions or worker-owned cooperative. For
Part I. Taxes that occurred during their tax year. purposes of items 1 and 2 above, a
“prohibited allocation of qualified
Line 4. Enter the total amount of the The section 4978 tax does not apply securities by any ESOP or eligible
disqualified benefit under section 4976. to a distribution of qualified securities or worker-owned cooperative” is any
Section 4976 imposes an excise tax on sale of such securities if any of the allocation of qualified securities
employers who maintain a funded following occurs. acquired in a nonrecognition-of-gain
welfare benefit plan that provides a • The death of the employee. sale under section 1042, which violates
disqualified benefit during any tax year. • The retirement of the employee after section 409(n), and any benefit that
The tax is 100% of the disqualified the employee has reached age 59 / .1 2 accrues to any person in violation of
benefit. • The disability of the employee (within section 409(n).
Generally, a disqualified benefit is the meaning of section 72(m)(7)).
any of the following. • The separation of the employee from Under section 409(n), an ESOP or
• Any post-retirement medical benefit service for any period that results in a worker-owned cooperative cannot allow
or life insurance benefit provided for a 1-year break in service, as defined in any portion of assets attributable to
key employee unless the benefit is section 411(a)(6)(A). employer securities acquired in a
section 1042 sale to accrue or be
provided from a separate account For purposes of section 4978, an allocated, directly or indirectly, to the
established for the key employee under exchange of qualified securities in a taxpayer, or any person related to the
section 419A(d). reorganization described in section taxpayer, involved in the transaction
• Any post-retirement medical benefit 368(a)(1) for stock of another during the nonallocation period. For
or life insurance benefit unless the plan corporation will not be treated as a purposes of section 409(n),
meets the nondiscrimination disposition. “relationship to the taxpayer” is defined
requirements of section 505(b) for those under section 267(b).
benefits. For section 4978 excise taxes,
• Any portion of the fund that reverts to the amount entered on Part I, The nonallocation period is the
the benefit of the employer. line 5a, is the amount realized period beginning on the date the
on the disposition of qualified securities, qualified securities are sold and ending
Lines 5a and 5b. Section 4978 multiplied by 10%. Also, check the on the later of:
imposes an excise tax on the sale or appropriate box on line 5b. • 10 years after the date of sale, or
transfer of securities acquired in a sale • The date on which the final payment
or qualified gratuitous transfer to which Line 6. Section 4979A imposes a 50% is made if acquisition indebtedness was
section 1042 or section 664(g) applied, excise tax on allocated amounts incurred at the time of sale.
respectively, if the sale or transfer takes involved in any of the following. The employer sponsoring the plan or
place within 3 years after the date of the 1. A prohibited allocation of qualified the eligible worker-owned cooperative is
acquisition of qualified securities, as securities by any ESOP or eligible responsible for paying the tax.
defined in section 1042(c)(1) or a worker-owned cooperative. For purposes of items 3 and 4, under
section 664(g) transfer.
2. A prohibited allocation described Line 6, earlier, the excise tax on these
The tax is 10% of the amount in section 664(g)(5)(A). Section transactions under section 4979A is
realized on the disposition of the 664(g)(5)(A) prohibits any portion of the 50% of the amount involved. The
qualified securities if an ESOP or assets of the ESOP attributable to amount involved includes the following.
eligible worker-owned cooperative, as securities acquired by the plan in a 1. The value of any synthetic equity
defined in section 1042(c)(2), disposes qualified gratuitous transfer to be owned by a disqualified person in any
of the qualified securities within the allocated to the account of: nonallocation year. “Synthetic equity”
3-year period described above, and
either of the following applies. a. Any person related to the means any stock option, warrant,
• The total number of shares held by decedent within the meaning of section restricted stock, deferred issuance
that plan or cooperative after the 267(b) or a member of the decedent's stock right, or similar interest or right
disposition is less than the total number family within the meaning of section that gives the holder the right to acquire
of employer securities held immediately 2032A(e)(2); or or receive stock of the S corporation in
after the sale, or b. Any person who, at the time of the future. Synthetic equity may also
• Except to the extent provided in the allocation or at any time during the include a stock appreciation right,
regulations, the value of qualified 1-year period ending on the date of the phantom stock unit, or similar right to a
securities held by the plan or acquisition of qualified employer future cash payment based on the value
cooperative after the disposition is less securities by the plan, is a 5% of the stock or appreciation; and
than 30% of the total value of all nonqualified deferred compensation as

-4- Instructions for Form 5330

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described in Regulations section             allocations described in items 1 through   • Annuity plans described in section 
1.409(p)-1(f)(2)(iv). The value of a         4, earlier, under Line 6.                  403(a);
synthetic equity is the value of the                                                    • Annuity contracts described in 
                                             Line 10a. Under section 4971(g)(2), 
shares on which the synthetic equity is                                                 section 403(b);
                                             each employer who contributes to a 
based or the present value of the                                                       • Qualified tuition programs described 
                                             multiemployer plan and fails to comply 
nonqualified deferred compensation.                                                     in section 529;
                                             with a funding improvement or 
    2. The value of any S corporation        rehabilitation plan will be liable for an  • Retirement plans maintained by a 
                                                                                        governmental employer described in 
shares in an ESOP accruing during a          excise tax for each failure to make a 
                                                                                        section 457(b);
nonallocation year or allocated directly     required contribution within the time 
or indirectly under the ESOP or any          frame under such plan. Enter the           • Individual retirement accounts within 
                                                                                        the meaning of section 408(a);
other plan of the employer qualified         amount of each contribution the 
under section 401(a) for the benefit of a    employer failed to make in a timely        • Individual retirement annuities within 
                                                                                        the meaning of section 408(b);
disqualified person. For additional          manner.
information, see Regulations section                                                    • Archer medical savings accounts 
                                               A “funding improvement plan” is a 
1.409(p)-1(b)(2).                                                                       (MSAs) within the meaning of section 
                                             plan which consists of the actions,        220(d);
    3. The total value of all                including options or a range of options    • Coverdell education savings 
deemed-owned shares of all                   to be proposed to the bargaining           accounts described in section 530; and
disqualified persons.                        parties, formulated to provide, based on   • Health savings accounts within the 
    For purposes of determining a            reasonably anticipated experience and      meaning of section 223(d).
nonallocation year, the attribution rules    reasonable actuarial assumptions, for 
                                                                                          An entity manager is the person who 
of section 318(a) will apply; however,       the attainment of the following 
                                                                                        approves or otherwise causes the entity 
the option rule of section 318(a)(4) will    requirements by the plan during the 
not apply. Additionally, the attribution     funding improvement period.                to be a party to a prohibited tax shelter 
                                                                                        transaction.
rules defining family member are               1. The plan's funded percentage as 
modified to include the individual's:        of the close of the funding improvement      The excise tax under section
•   Spouse,                                  period equals or exceeds a percentage      4965(a)(2) is $20,000 for each approval 
•   Ancestor or lineal descendant of the     equal to the sum of:                       or other act causing the organization to 
                                                                                        be a party to a prohibited tax shelter 
individual or the individual's spouse,         a. The percentage as of the              transaction.
and                                          beginning of the funding improvement 
                                                                                          A “prohibited tax shelter transaction” 
•   A brother or sister of the individual or period, plus
of the individual's spouse and any lineal                                               is any listed transaction and any 
                                               b. 33% of the difference between 
descendant of the brother or sister.                                                    prohibited reportable transaction, as 
                                             100% and the percentage as of the          defined, later.
    A spouse of an individual legally        beginning of the funding improvement 
separated from an individual under a         period (or 20% of the difference if the      1. A “listed transaction” is a 
decree of divorce or separate                plan is in seriously endangered status).   reportable transaction that is the same 
maintenance is not treated as the                                                       as, or substantially similar to, a 
                                               2. No accumulated funding 
individual's spouse.                                                                    transaction specifically identified by the 
                                             deficiency for any plan year during the    Secretary of the Treasury as a tax 
    An individual is a disqualified person   funding improvement period, taking into    avoidance transaction for purposes of 
if:                                          account any extension of the               section 6011.
•   The total number of shares owned by      amortization period under section 
                                                                                          2. A “prohibited reportable 
the person and the members of the            431(d).
person's family, as defined in section                                                  transaction” is:
409(p)(4)(D), is at least 20% of the           A “rehabilitation plan” is a plan which    a. Any confidential transaction 
deemed-owned shares, as defined in           consists of actions, including options or  within the meaning of Regulations 
section 409(p)(4)(C), in the S               a range of options to be proposed to the   section 1.6011-4(b)(3), or
corporation; or                              bargaining parties, formulated to enable 
•   The person owns at least 10% of the      the plan to cease to be in critical status   b. Any transaction with contractual 
deemed-owned shares, as defined in           by the end of the rehabilitation period.   protection within the meaning of 
                                                                                        Regulations section 1.6011-4(b)(4).
section 409(p)(4)(C), in the S                 All or part of this excise tax may be 
corporation.                                 waived under section 4971(g)(5).           Part II. Tax Due
        Under section 409(p)(7), the         Line 16. If a tax-exempt entity manager           If you are filing an amended 
    !   Secretary of the Treasury may,       approves or otherwise causes the entity           Form 5330 and you paid taxes 
CAUTION through regulations or other         to be a party to a prohibited tax shelter         with your original return and 
guidance of general applicability,           transaction during the year and knows      those taxes have the same due date as 
provide that a nonallocation year occurs     or has reason to know that the             those previously reported, check the 
in any case in which the principal           transaction is a prohibited tax shelter    box in item H and enter the tax reported 
purpose of the ownership structure of an     transaction, the entity manager must       on your original return in the entry space 
S corporation constitutes an avoidance       pay an excise tax under section            for line 18. If you file Form 5330 for a 
or evasion of section 409(p). See            4965(b)(2).                                claim for refund or credit, show the 
Regulations section 1.408(p)-1.                For purposes of section 4965, plan       amount of overreported tax in 
    For section 4979A excise taxes, the      entities are:                              parentheses on line 19. Otherwise, 
amount entered on Part I, line 6, is 50%     • Qualified pension, profit-sharing, and   show the amount of additional tax due 
of the amount involved in the prohibited     stock bonus plans described in section 
                                             401(a);

Instructions for Form 5330                                     -5-

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on line 19 and include the payment with Although pre-1987 nondeductible For these purposes, multiemployer
the amended Form 5330. contributions are not subject to this plans are not taken into consideration in
excise tax, they are taken into account applying the overall limit on deductions
Lines 17 through 19. If you file Form to determine the extent to which where there is a combination of defined
5330 on paper, make your check or post-1986 contributions are deductible. benefit and defined contribution plans.
money order payable to the “United See section 4972 and Pub. 560,
States Treasury” for the full amount due. Retirement Plans for Small Business, for Schedule B. Tax on
Attach the payment to your return. Write details. Excess Contributions to
your name, identifying number, plan
number, and “Form 5330, Section ____” Defined benefit plans exception. Section 403(b)(7)(A)
on your payment. For purposes of determining the amount
Custodial Accounts
of nondeductible contributions subject
File at the address shown under to the 10% excise tax, the employer (Section 4973(a)(3))
Where To File, earlier. may elect not to include any Section 4973(a) imposes a 6% excise
contributions to a defined benefit plan tax on excess contributions to section
Schedule A. Tax on except, in the case of a multiemployer 403(b)(7)(A) custodial accounts at the
Nondeductible Employer plan, to the extent those contributions close of the tax year. The tax is paid by
Contributions to Qualified exceed the full-funding limitation (as the individual account holder.
defined in section 431(c)(6)). This Line 1. Enter total current year
Employer Plans (Section election applies to terminated and contributions, less any rollover
4972) ongoing plans. An employer making this contributions described in section
election cannot also benefit from the
Section 4972. Section 4972 imposes 403(b)(8) or 408(d)(3)(A).
exceptions for terminating plans and for
an excise tax on employers who make Line 2. Enter the amount excludable
certain contributions to defined
nondeductible contributions to their under section 415(c) (limit on annual
contribution plans under section 4972(c)
qualified plans. The excise tax is equal additions).
(6). When determining the amount of
to 10% of the nondeductible
nondeductible contributions, the
contributions in the plan as of the end of To determine the amount
deductible limits under section 404(a)(7)
the employer's tax year. TIP excludable for a specific year,
must be applied first to contributions to see Pub. 571, Tax-Sheltered
A “qualified employer plan” for defined contribution plans and then to Annuity Plans (403(b) Plans), for that
purposes of this section means any plan contributions to defined benefit plans. year.
qualified under section 401(a), any
annuity plan qualified under section Defined contribution plans
403(a), and any simplified employee exception. In determining the amount The limit on annual additions under
pension plan qualified under section of nondeductible contributions subject section 415(c)(1)(A) is subject to
408(k) or any simple retirement account to the 10% excise tax, do not include cost-of-living adjustments as described
under section 408(p). The term qualified any of the following. in section 415(d). The dollar limit for a
plan does not include certain • Employer contributions to one or calendar year, as adjusted annually, is
governmental plans and certain plans more defined contribution plans which published during the fourth quarter of
maintained by tax-exempt are nondeductible solely because of the prior calendar year in the Internal
organizations. section 404(a)(7) that do not exceed the Revenue Bulletin.
matching contributions described in
For purposes of section 4972, Schedule C. Tax on
section 401(m)(4)(A).
“nondeductible contributions” for the
employer's current tax year are the sum • Contributions to a SIMPLE 401(k) or Prohibited Transactions
a SIMPLE IRA considered
of: (Section 4975)
nondeductible because they are not
1. The excess (if any) of the made in connection with the employer's Section 4975. Section 4975 imposes
employer's contribution for the tax year trade or business. However, this an excise tax on a disqualified person
less the amount allowable as a provision pertaining to SIMPLEs does who engages in a prohibited transaction
deduction under section 404 for that not apply to contributions made on with the plan.
year; and behalf of the employer or the employer's
2. The total amount of the family. Plan. For purposes of this section,
the term “plan” means any of the
employer's contributions for each For purposes of this exception, the following.
preceding tax year that was not combined plan deduction limits are first • A trust described in section 401(a)
allowable as a deduction under section applied to contributions to the defined that forms part of a plan.
404 for such preceding year, reduced benefit plan and then to the defined • A plan described in section 403(a)
by the sum of: contribution plan. that is exempt from tax under section
a. The portion of that amount Restorative payments to a defined 501(a).
available for return under the applicable contribution plan are not considered • An individual retirement account
qualification rules and actually returned nondeductible contributions if the described in section 408(a).
to the employer prior to the close of the payments are made to restore some or • An individual retirement annuity
current tax year; and all of the plan's losses due to an action described in section 408(b).
b. The portion of such amount that (or a failure to act) that creates a • An Archer MSA described in section
became deductible for a preceding tax reasonable risk of liability for breach of 220(d).
year or for the current tax year. fiduciary duty. Amounts paid in excess • A Coverdell education savings
of the loss are not considered account described in section 530.
restorative payments.

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• A Health Savings Account described officers or directors), a 10% or more or other property (rent, etc.) are of an
in section 223(d). shareholder or highly compensated ongoing nature and will be treated as a
• A trust described in section employee (earning 10% or more of the new prohibited transaction on the first
501(c)(22). yearly wages of an employer) of a day of each succeeding tax year or part
person described in (3), (4), (5), or (7). of a tax year that is within the taxable
Note. For purposes of section 4975, 9. A 10% or more (in capital or period.
the term “plan” does not include a profits) partner or joint venturer of a Line 2, column (b). List the date of all
section 403(b) tax-sheltered annuity person described in (3), (4), (5), or (7). prohibited transactions that took place
plan. See section 4975(e).
10. Any disqualified person, as in connection with a particular plan
If the IRS determined at any described in (1) through (9) above, who during the current tax year. Also, list the
! time that your plan was a plan is a disqualified person with respect to date of all prohibited transactions that
CAUTION as defined above, it will always took place in prior years unless either
any plan to which a section 501(c)(22)
remain subject to the excise tax on trust applies, that is permitted to make the transaction was corrected in a prior
prohibited transactions under section payments under section 4223 of the tax year or the section 4975(a) tax was
4975. This also applies to the tax on Employee Retirement Income Security assessed in the prior tax year. A
minimum funding deficiencies under Act (ERISA). disqualified person who engages in a
section 4971. prohibited transaction must file a
Prohibited transaction. A separate Form 5330 to report the excise
Disqualified person. A “disqualified “prohibited transaction” is any direct or tax due under section 4975 for each tax
person” is a person who is any of the indirect: year.
following. 1. Sale or exchange, or leasing of
Line 2, columns (d) and (e). The
1. A fiduciary. any property between a plan and a
“amount involved in a prohibited
disqualified person; or a transfer of real
2. A person providing services to transaction” means the greater of the
or personal property by a disqualified
the plan. amount of money and the fair market
person to a plan where the property is
value (FMV) of the other property given,
3. An employer, any of whose subject to a mortgage or similar lien
or the amount of money and the FMV of
employees are covered by the plan. placed on the property by the
the other property received. However,
4. An employee organization, any of disqualified person within 10 years prior
for services described in sections
whose members are covered by the to the transfer, or the property
4975(d)(2) and (10), the amount
plan. transferred is subject to a mortgage or
involved only applies to excess
5. A direct or indirect owner of 50% similar lien which the plan assumes;
compensation. For purposes of section
or more of: 2. Lending of money or other 4975(a), FMV must be determined as of
a. The combined voting power of all extension of credit between a plan and the date on which the prohibited
classes of stock entitled to vote, or the a disqualified person; transaction occurs. If the use of money
total value of shares of all classes of 3. Furnishing of goods, services, or or other property is involved, the amount
stock of a corporation; facilities between a plan and a involved is the greater of the amount
b. The capital interest or the profits disqualified person; paid for the use or the FMV of the use
interest of a partnership; or 4. Transfer to, or use by or for the for the period for which the money or
c. The beneficial interest of a trust benefit of, a disqualified person of other property is used. In addition,
or unincorporated enterprise in (a), (b), income or assets of a plan; transactions involving the use of money
or other property will be treated as
or (c), which is an employer or an 5. Act by a disqualified person who giving rise to a prohibited transaction
employee organization described in (3) is a fiduciary whereby he or she deals occurring on the date of the actual
or (4) above. A limited liability company with the income or assets of a plan in his transaction, plus a new prohibited
should be treated as a corporation or a or her own interest or account; or transaction on the first day of each
partnership, depending on how the 6. Receipt of any consideration for succeeding tax year or portion of a
organization is treated for federal tax his or her own personal account by any succeeding tax year which is within the
purposes. disqualified person who is a fiduciary taxable period. The “taxable period” for
6. A member of the family of any from any party dealing with the plan this purpose is the period of time
individual described in (1), (2), (3), or connected with a transaction involving beginning with the date of the prohibited
(5). A “member of a family” is the the income or assets of the plan. transaction and ending with the earliest
spouse, ancestor, lineal descendant, of:
Exemptions. See sections 4975(d),
and any spouse of a lineal descendant. 1. The date the correction is
4975(f)(6)(B)(ii), and 4975(f)(6)(B)(iii)
7. A corporation, partnership, or for specific exemptions to prohibited completed,
trust or estate of which (or in which) any transactions. Also, see section 2. The date of the mailing of a notice
direct or indirect owner holds 50% or 4975(c)(2) for certain other transactions of deficiency, or
more of the interest described in (5a), or classes of transactions that may 3. The date on which the tax under
(5b), or (5c) of such entity. For this become exempt. section 4975(a) is assessed.
purpose, the beneficial interest of the
trust or estate is owned, directly or Line 1. Check the box that best
See the instructions for Schedule C,
indirectly, or held by persons described characterizes the prohibited transaction
under Additional tax for failure to correct
in (1) through (5). for which an excise tax is being paid. A
the prohibited transaction (section
prohibited transaction is discrete unless
4975(b)), for the definition of
8. An officer, director (or an it is of an ongoing nature. Transactions
“correction.”
individual having powers or involving the use of money (loans, etc.)
responsibilities similar to those of

Instructions for Form 5330 -7-

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Figure 1. Example for the Calendar 2020 Plan Year Used When Filing for the 2020 Tax Year
Schedule C. Tax on Prohibited Transactions (Section 4975) (see instructions) Reported by the last day of the 7th
month after the end of the tax year of the employer (or other person who must file the return)
(a) (b) Date of (d) Amount involved in prohibited (e) Initial tax on prohibited
Transaction transaction (c) Description of prohibited transaction transaction (see instructions) transaction (multiply each
number (see transaction in column (d) by the
instructions) appropriate rate (see
instructions))
(i) 7-1-20 Loan $6,000 $900
(ii)
(iii)
3 Add amounts in column (e). Enter here and on Part I, line 3a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ▶ $900

Temporary Regulations section section 4975(a) has been mailed to the Form 5330 would include both the
! 141.4975-13 states that, until disqualified person and no assessment prohibited transaction of July 1, 2020,
CAUTION final regulations are written of such excise tax has been made by with an amount involved of $6,000,
under section 4975(f), the definitions of the IRS before the time the disqualified resulting in a tax due of $900 ($6,000 x
amount involved and correction found in person filed the Forms 5330. 15%), and the second prohibited
Regulations section 53.4941(e)-1 will Each prohibited transaction has its transaction of January 1, 2021, with an
apply. own separate taxable period that begins amount involved of $12,000 (12 months
on the date the prohibited transaction x $1,000), resulting in a tax due of
Failure to transmit participant occurred or is deemed to occur and $1,800 ($12,000 x 15%). (See Figure 2,
contributions. For purposes of ends on the date of the correction. The later.) The taxable period for the second
calculating the excise tax on a taxable period that begins on the date prohibited transaction runs from
prohibited transaction where there is a the loan occurs runs from July 1, 2020 January 1, 2021, through December 31,
failure to transmit participant (date of loan), through December 31, 2021 (date of correction). Because
contributions (elective deferrals) or 2021 (date of correction). When a loan there are two prohibited transactions
amounts that would have otherwise is a prohibited transaction, the loan is with taxable periods running during
been payable to the participant in cash, treated as giving rise to a prohibited 2021, the section 4975(a) tax is due for
the amount involved is based on interest transaction on the date the transaction the 2021 tax year for both prohibited
on those elective deferrals. See Rev. occurs, and an additional prohibited transactions.
Rul. 2006-38. transaction on the first day of each When a loan from a qualified
Column (e). The initial tax on a succeeding tax year (or portion of a tax TIP plan that is a prohibited
prohibited transaction is 15% of the year) within the taxable period that transaction spans successive
amount involved in each prohibited begins on the date the loan occurs. tax years, constituting multiple
transaction for each year or part of a Therefore, in this example, there are two prohibited transactions, and during
year in the taxable period. Multiply the prohibited transactions, the first those years the first tier prohibited
amount in column (d) by 15%. occurring on July 1, 2020, and ending transaction excise tax rate changes, the
on December 31, 2020, and the second first tier excise tax liability for each
Example. The example of a occurring on January 1, 2021, and prohibited transaction is the sum of the
prohibited transaction below does not ending on December 31, 2021. products resulting from multiplying the
cover all types of prohibited
transactions. For more examples, see Section 4975(a) imposes a 15% amount involved for each year in the
Regulations section 53.4941(e)-1(b)(4). excise tax on the amount involved for taxable period for that prohibited
each tax year or part thereof in the transaction by the excise tax rate in
A disqualified person borrows money taxable period of each prohibited effect at the beginning of that taxable
from a plan in a prohibited transaction transaction. period. For more information, see Rev.
under section 4975. The FMV of the use Rul. 2002-43, 2002-32 I.R.B. 85 at
of the money and the actual interest on The Form 5330 for the year
the loan is $1,000 per month (the actual ending December 31, 2020. The www.irs.gov/pub/irs-irbs/irb02-28.pdf.
interest is paid in this example). The amount involved to be reported in the Unlike the previous example, the
loan was made on July 1, 2020 (date of Form 5330, Schedule C, line 2, column example in Rev. Rul. 2002-43 contains
transaction), and repaid on December (d), for the 2020 plan year, is $6,000 (6 unpaid interest.
31, 2021 (date of correction). The months x $1,000). The tax due is $900
disqualified person's tax year is the ($6,000 x 15%). (See Figure 1 above.) Additional tax for failure to
calendar year. On July 31, 2022, the (Any interest and penalties imposed for correct the prohibited transaction
disqualified person files a delinquent the delinquent filing of Form 5330 and (section 4975(b)). To avoid liability for
Form 5330 for the 2020 plan year the delinquent payment of the excise tax additional taxes and penalties, and in
(which in this case is the calendar year) for 2020 will be billed separately to the some cases further initial taxes, a
and a timely Form 5330 for the 2021 disqualified person.) correction must be made within the
taxable period. The term “correction” is
plan year (which in this case is the The Form 5330 for the year defined as undoing the prohibited
calendar year). No notice of deficiency ending December 31, 2021. The transaction to the extent possible, but in
with respect to the tax imposed by excise tax to be reported on the 2021 any case placing the plan in a financial

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Figure 2. Example for the Calendar 2021 Plan Year Used When Filing for the 2021 Tax Year
Schedule C. Tax on Prohibited Transactions (Section 4975) (see instructions) Reported by the last day of the 7th
month after the end of the tax year of the employer (or other person who must file the return)
(a) (b) Date of (d) Amount involved in prohibited (e) Initial tax on prohibited
Transaction transaction (c) Description of prohibited transaction transaction (see instructions) transaction (multiply each
number (see transaction in column (d) by the
instructions) appropriate rate (see
instructions))
(i) 7-1-20 Loan $6,000 $900
(ii) 1-1-21 Loan $12,000 $1,800
(iii)
3 Add amounts in column (e). Enter here and on Part I, line 3a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ▶ $2,700

position not worse than that in which it For this purpose, an “eligible 4. Transfer to, or use by or for the
would be if the disqualified person were investment advice arrangement” is an benefit of, a disqualified person of
acting under the highest fiduciary arrangement which either: income or assets of a plan.
standards. • Provides that any fees, including any
If the prohibited transaction is not commission or other compensation, However, if at the time the
corrected within the taxable period, an received by the fiduciary adviser for transaction was entered into, the
additional tax equal to 100% of the investment advice or with respect to the disqualified person knew or had reason
amount involved will be imposed under sale, holding, or acquisition of any to know that the transaction was
section 4975(b). Any disqualified person security or other property for the prohibited, the transaction would be
who participated in the prohibited investment of plan assets do not vary subject to the tax on prohibited
transaction (other than a fiduciary acting depending on the basis of any transactions.
only as such) must pay this tax imposed investment option selected; or For purposes of section 4975(d)(23),
by section 4975(b). Report the • Uses a computer model under an the term “correct” means to:
additional tax on Part I, Section A, investment advice program, described • Undo the transaction to the extent
line 3b. in section 4975(f)(8)(C), in connection possible and in all cases to make good
with investment advice provided by a to the plan or affected account any
Line 4. Check “No” if there has not fiduciary adviser to a participant or losses resulting from the transaction,
been a correction of all of the prohibited beneficiary. and
transactions by the end of the tax year Additionally, the eligible investment • Restore to the plan or affected
for which this Form 5330 is being filed. advice arrangement must meet the account any profits made through the
Attach a statement including item provisions of sections 4975(f)(8)(D), (E), use of assets of the plan.
number from line 2a and description (F), (G), (H), and (I). The “correction period” is the 14-day
indicating when the correction will be period beginning on the date on which
For purposes of the statutory
made. the disqualified person discovers or
exemption on investment advice, a
Line 5. If more than one disqualified “fiduciary adviser” is defined in section reasonably should have discovered that
person participated in the same 4975(f)(8)(J). the transaction constitutes a prohibited
prohibited transaction, list on this transaction.
schedule the name, address, and SSN Correcting certain prohibited
or EIN of each disqualified person, other transactions. Generally, if a Schedule D. Tax on Failure
than the disqualified person who files disqualified person enters into a direct
this return. or indirect prohibited transaction, listed To Meet Minimum Funding
in (1) through (4) below, in connection Standards (Section
For all transactions, complete with the acquisition, holding, or 4971(a))
columns (a), (b), and (c). If the disposition of certain securities or In the case of a single-employer plan,
transaction has been corrected, commodities, and the transaction is section 4971(a) imposes a 10% tax on
complete columns (a) through (e). If corrected within the correction period, it the aggregate unpaid minimum required
additional space is needed, you may will not be treated as a prohibited contributions for all plan years
attach a statement fully explaining the transaction and no tax will be assessed. remaining unpaid as of the end of any
correction and identifying persons
involved in the prohibited transaction. 1. Sale or exchange, or leasing of plan year. In the case of a
any property between a plan and a multiemployer plan, section 4971(a)
Prohibited transactions and invest- disqualified person. imposes a 5% tax on the amount of the
ment advice. The prohibited 2. Lending of money or other accumulated funding deficiency
transaction rules of section 4975(c) will extension of credit between a plan and determined as of the end of the plan
not apply to any transaction in a disqualified person. year.
connection with investment advice if the
investment advice provided by a 3. Furnishing of goods, services, or If a plan fails to meet the funding
fiduciary adviser is provided under an facilities between a plan and a requirements under section 412, the
eligible investment advice arrangement. disqualified person. employer and all controlled group
members will be subject to excise taxes
under sections 4971(a) and (b).

Instructions for Form 5330 -9-

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   Except in the case of a multiemployer  contribution or the accumulated funding      of the rehabilitation period, or has 
plan, all members of a controlled group   deficiency on Part I, Section B, line 8b.    received certification under section 
are jointly and severally liable for this                                              432(b)(3)(A)(ii) for 3 consecutive plan 
tax. A “controlled group” in this case    Schedule E. Tax on Failure                   years that the plan is not making the 
means a controlled group of               To Pay Liquidity Shortfall                   scheduled progress in meeting its 
corporations under section 414(b), a                                                   requirements under the rehabilitation 
group of trades or businesses under       (Section 4971(f)(1))                         plan, will be treated as having an 
common control under section 414(c),      If your plan has a liquidity shortfall for   accumulated funding deficiency for the 
an affiliated service group under section which an excise tax under section            last plan year in such period and each 
414(m), and any other group treated as    4971(f)(1) is imposed for any quarter of     succeeding plan year until the funding 
a single employer under section 414(o).   the plan year, complete lines 1 through      requirements are met.
                                          4.
        If the IRS determined at any                                                     In both cases, the accumulated 
                                          Line 1.  Enter the amount of the liquidity   funding deficiency is an amount equal to 
CAUTION as defined on Schedule C, it will 
  !     time that your plan was a plan    shortfall(s) for each quarter of the plan    the greater of the amount of the 
always remain subject to the excise tax   year.                                        contributions necessary to meet the 
                                                                                       benchmarks or requirements, or the 
on failure to meet minimum funding        Line 2.  Enter the amount of any 
                                                                                       amount of the accumulated funding 
standards.                                contributions made to the plan by the 
                                                                                       deficiency without regard to this rule. 
                                          due date of the required quarterly 
                                                                                       The existence of an accumulated 
Line 1. Enter the amount (if any) of the  installment(s) that partially corrected the 
                                                                                       funding deficiency triggers the initial 5% 
aggregate unpaid minimum required         liquidity shortfall(s) reported on line 1.
contributions (or in the case of a                                                     excise tax under section 4971(a).
multiemployer plan, an accumulated        Line 3.  Enter the net amount of the           A plan is in “endangered status” if 
funding deficiency as defined in section  liquidity shortfall. (Subtract line 2 from   either of the following occurs.
431(a) (or section 418B if a              line 1.)                                     • The plan's actuary timely certifies that 
multiemployer plan in reorganization).      Additional tax for failure to              the plan is not in critical status for that 
Line 2. Multiply line 1 by the applicable correct liquidity shortfall. If the plan     plan year and at the beginning of that 
tax rate shown below and enter the        has a liquidity shortfall as of the close of plan year the plan's funded percentage 
result.                                   any quarter and as of the close of the       for the plan year is less than 80%.
• 10% for plans other than                following 4 quarters, an additional tax      • The plan has an accumulated funding 
multiemployer plans.                      will be imposed under section 4971(f)(2)     deficiency for the plan year or is 
• 5% for all multiemployer plans.         equal to the amount on which tax was         projected to have such an accumulated 
                                          imposed by section 4971(f)(1) for such       funding deficiency for any of the 6 
   Additional tax for failure to          quarter. Report the additional tax on        succeeding plan years, taking into 
correct. For single-employer plans,       Part I, Section B, line 9b.                  account any extension of amortization 
when an initial tax is imposed under                                                   periods under section 431(d).
section 4971(a) on any unpaid minimum                                                    A plan is in “critical status” if it is 
required contribution and the unpaid      Schedule F. Tax on 
minimum required contribution remains     Multiemployer Plans in                       determined by the multiemployer plan's 
                                                                                       actuary that one of the four formulas in 
unpaid as of the close of the taxable     Endangered or Critical                       section 432(b)(2) is met for the 
period, an additional tax of 100% of the                                               applicable plan year.
                                          Status (Sections
amount that remains unpaid is imposed 
under section 4971(b).                    4971(g)(3) & 4971(g)(4))                       All or part of this excise tax may be 
   For multiemployer plans, when an       For years beginning after 2007, section      waived due to reasonable cause.
initial tax is imposed under section      4971(g) imposes an excise tax on             Line 2. Under section 4971(g)(4), the 
4971(a)(2) on an accumulated funding      employers who contribute to                  plan sponsor of a multiemployer plan in 
deficiency and the accumulated funding    multiemployer plans for failure to comply    critical status, as defined above, will be 
deficiency is not corrected within the    with a funding improvement or                liable for an excise tax for failure to 
taxable period, an additional tax equal   rehabilitation plan, failure to meet         adopt a rehabilitation plan within the 
to 100% of the accumulated funding        requirements for plans in endangered or      time prescribed under section 432. The 
deficiency, to the extent not corrected,  critical status, or failure to adopt a       tax is equal to the greater of:
is imposed under section 4971(b).         rehabilitation plan. See the instructions    • The amount of tax imposed under 
                                          for line 10a, earlier.
   For this purpose, the “taxable period”                                              section 4971(a)(2); or
is the period beginning with the end of   Line 1.  Under section 4971(g)(3), a         • An amount equal to $1,100, 
the plan year where there is an unpaid    multiemployer plan that is in seriously      multiplied by the number of days in the 
minimum required contribution or an       endangered status when it fails to meet      tax year which are included in the period 
accumulated funding deficiency and        its applicable benchmarks by the end of      that begins on the first day following the 
ending on the earlier of:                 the funding improvement period will be       close of the 240-day period that a 
• The date the notice of deficiency for   treated as having an accumulated             multiemployer plan has to adopt a 
the section 4971(a) excise tax is mailed, funding deficiency for the last plan year    rehabilitation plan once it has entered 
or                                        in such period and each succeeding           critical status and that ends on the day 
• The date the section 4971(a) excise     year until the funding benchmarks are        that the rehabilitation plan is adopted. 
tax is assessed.                          met.                                         Section 432(e)(1)(A) allows the plan 
   Report the tax for failure to correct    Similarly, a plan that is in critical      sponsor to adopt a rehabilitation plan 
the unpaid minimum required               status and either fails to meet the          within the 240-day period following the 
                                          requirements of section 432 by the end       required date for the actuarial 

                                                   -10-                                        Instructions for Form 5330

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certification of critical status in section so elects, was in the top-paid group for 4980(d)(1)(A) or (B) for more
432(b)(3)(A). the preceding year. information.
Liability for this tax is imposed on An employee is in the “top-paid An “employer reversion” is the
each plan sponsor. This excise tax may group” for any year if the employee is in amount of cash and the FMV of property
not be waived. the group consisting of the top 20% of received, directly or indirectly, by an
Follow the instructions as employees when ranked on the basis of employer from a qualified plan. For
compensation paid. An employee (who exceptions to this definition, see section
CAUTION and completing line 2b.
! defined above for counting days is not a 5% owner) who has 4980(c)(2)(B) and section 4980(c)(3).
compensation in excess of $130,000 is
Complete line 2b as instructed below. not a highly compensated employee if A “qualified plan” is:
Enter the number of days during the tax the employer elects the top-paid group • Any plan meeting the requirements of
year which are included in the period limitation and the employee is not a section 401(a) or 403(a), other than a
beginning on the first day following the member of the top-paid group. plan maintained by an employer if that
close of the 240-day period and ending employer has at all times been exempt
on the day the rehabilitation plan is The excess contributions subject to from federal income tax; or
adopted. the section 4979 excise tax are equal to A governmental plan within the
•
the amount by which employer meaning of section 414(d).
contributions actually paid over to the
Schedule G. Tax on trust exceed the employer contributions Terminated defined benefit plan.
Excess Fringe Benefits that could have been made without If a defined benefit plan is terminated,
(Section 4977) violating the special nondiscrimination and an amount in excess of 25% of the
If you made an election to be taxed requirements of section 401(k)(3) or maximum amount otherwise available
under section 4977 to continue your section 408(k)(6) in the instance of for reversion is transferred from the
nontaxable fringe benefit policy that was certain SEPs. terminating defined benefit plan to a
defined contribution plan, the amount
in existence on or after January 1, 1984, The excess aggregate contributions transferred is not treated as an
check “Yes” on line 1 and complete subject to the section 4979 excise tax employer reversion for purposes of
lines 2 through 4. are equal to the amount by which the section 4980. However, the amount the
Line 3. Excess fringe benefits are aggregate matching contributions of the employer receives is subject to the 20%
calculated by subtracting 1% of the employer and the employee excise tax. For additional information,
aggregate compensation paid by you to contributions (and any qualified see Rev. Rul. 2003-85, 2003-32 I.R.B.
your employees during the calendar nonelective contribution or elective 291 at www.irs.gov/irb/2003-32_IRB/
year that was includible in their gross contribution taken into account in ar11.html.
income from the aggregate value of the computing the contribution percentage
nontaxable fringe benefits under under section 401(m)) actually made on Lines 1 through 4. Enter the date of
sections 132(a)(1) and (2). behalf of the highly compensated reversion on line 1. Enter the reversion
employees for each plan year exceed amount on line 2a and the applicable
Schedule H. Tax on the maximum amount of contributions excise tax rate on line 2b. If you use a
permitted in the contribution percentage tax percentage other than 50% on
Excess Contributions to computation under section line 2b, explain on line 4 why you qualify
Certain Plans (Section 401(m)(2)(A). to use a rate other than 50%.
4979)
However, there is no excise tax Schedule J. Tax on Failure
Any employer who maintains a plan liability if the excess contributions or the
To Provide Notice of
described in section 401(a), 403(a), excess aggregate contributions and any
403(b), 408(k), or 501(c)(18) may be income earned on the contributions are Significant Reduction in
subject to an excise tax on excess distributed (or, if forfeitable, forfeited) to Future Accruals (Section
aggregate contributions made on behalf the participants for whom the excess 4980F)
of highly compensated employees. The contributions were made within 2 /1 2
employer may also be subject to an months after the end of the plan year. Section 204(h) notice. Section 4980F
excise tax on excess contributions to a imposes an excise tax on an employer
cash or deferred arrangement (or, in the case of a multiemployer plan,
connected with the plan. Schedule I. Tax on
the plan) for failure to give section
Reversion of Qualified
The tax is on the excess 204(h) notice of plan amendments that
contributions and the excess aggregate Plan Assets to an provide for a significant reduction in the
contributions made to or on behalf of the Employer (Section 4980) rate of future benefit accrual or the
highly compensated employees as Section 4980 imposes an excise tax on elimination or significant reduction of an
defined in section 414(q). an employer reversion of qualified plan early retirement benefit or
Generally, a “highly compensated assets to an employer. Generally, the retirement-type subsidy. The tax is $100
employee” is an employee who: tax is 20% of the amount of the per day per each applicable individual
employer reversion. The excise tax rate and each employee organization
1. Was a 5% owner at any time increases to 50% if the employer does representing participants who are
during the year or the preceding year; or not establish or maintain a qualified applicable individuals for each day of
2. For the preceding year, had replacement plan following the plan the noncompliance period. This notice
compensation from the employer in termination or provide certain pro-rata is called a “section 204(h) notice”
excess of a dollar amount for the year benefit increases in connection with the because section 204(h) of ERISA has
($130,000 for 2021) and, if the employer plan termination. See section parallel notice requirements.

Instructions for Form 5330 -11-

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An “applicable individual” is a responsible for the tax) knew, or information on this form to carry out the
participant in the plan, or an alternate exercising reasonable diligence would Internal Revenue laws of the United
payee of a participant under a qualified have known, that the failure existed. States. This form is required to be filed
domestic relations order, whose rate of under sections 4965, 4971, 4972, 4973,
future benefit accrual (or early Generally, section 204(h) notice must 4975, 4976, 4977, 4978, 4979, 4979A,
retirement benefit or retirement-type be provided at least 45 days before the 4980, and 4980F of the Internal
subsidy) under the plan may reasonably effective date of the section 204(h) Revenue Code. Section 6109 requires
be expected to be significantly reduced amendment. For exceptions to this rule, you to provide your identifying number.
by a plan amendment. (For plan years see Regulations section 54.4980F-1, If you fail to provide this information in a
beginning after December 31, 2007, the Q&A 9. timely manner, you may be liable for
requirement to give 204(h) notice was If the person subject to liability for the penalties and interest. Routine uses of
extended to an employer who has an excise tax exercised reasonable this information include giving it to the
obligation to contribute to a diligence to meet the notice Department of Justice for civil and
multiemployer plan.) requirement, the total excise tax criminal litigation, and cities, states, and
Whether a participant, alternate imposed during a tax year of the the District of Columbia for use in
payee, or an employer (as described in employer will not exceed $500,000. administering their tax laws. We may
the above paragraph) is an applicable Furthermore, in the case of a failure due also disclose this information to federal
individual is determined on a typical to reasonable cause and not to willful and state or local agencies to enforce
business day that is reasonably neglect, the Secretary of the Treasury is federal nontax criminal laws and to
approximate to the time the section authorized to waive the excise tax to the combat terrorism.
204(h) notice is provided (or on the extent that the payment of the tax would
latest date for providing section 204(h) be excessive relative to the failure You are not required to provide the
notice, if earlier), based on all relevant involved. See Rev. Proc. 2013-4, information requested on a form that is
facts and circumstances. For more 2013-1 I.R.B. 123, as revised by subject to the Paperwork Reduction Act
information in determining whether an subsequent documents, available at unless the form displays a valid OMB
individual is a participant or alternate www.irs.gov/irb/2013-01_IRB/ar09.html, control number. Books or records
payee, see Regulations section for procedures to follow in applying for a relating to a form or its instructions must
54.4980F-1, Q&A 10. waiver of part or all of the excise tax due be retained as long as their contents
to reasonable cause. may become material in the
The “noncompliance period” is the administration of any Internal Revenue
period beginning on the date the failure Line 4. A failure occurs on any day that
law. Generally, tax returns and return
first occurs and ending on the date the any applicable individual (AI) is not
information are confidential, as required
notice of failure is provided or the failure provided section 204(h) notice.
by section 6103.
is corrected. Example. There are 1,000 AIs. The
Exceptions. The section 4980F plan administrator fails to give section The time needed to complete and file
excise tax will not be imposed for a 204(h) notice to 100 AIs for 60 days, this form will vary depending on
failure during any period in which the and to 50 of those AIs for an additional individual circumstances. The estimated
following occurs. 30 days. In this case, there are 7,500 average time is:
failures ((100 AIs x 60 days) + (50 AIs x
1. Any person subject to liability for 30 days) = 7,500). Recordkeeping. . . 30 hr., 22 min.
the tax did not know that the failure
Learning about
existed and exercised reasonable Schedule K. Tax on the law or the
diligence to meet the notice
requirement. A person is considered to Prohibited Tax Shelter form. . . . . . . . . . . 15 hr., 45 min.
have exercised reasonable diligence Transactions (Section Preparing and
but did not know the failure existed only 4965) sending the form
if: Section 4965 provides that an entity to the IRS. . . . . . . 18 hr., 08 min.
a. The responsible person manager of a tax-exempt organization
exercised reasonable diligence in may be subject to an excise tax on
attempting to deliver section 204(h) prohibited tax shelter transactions under If you have comments concerning the
notice to applicable individuals by the section 4965. In the case of a plan accuracy of these time estimates or
latest date permitted; or entity, an entity manager is any person suggestions for making this form
b. At the latest date permitted for who approves or otherwise causes the simpler, we would be happy to hear
delivery of section 204(h) notice, the tax-exempt entity to be a party to a from you. You can send us comments
person reasonably believed that section prohibited tax shelter transaction. The from IRS.gov/FormsComments. Or you
204(h) notice was actually delivered to excise tax is $20,000 and is assessed can write to the Internal Revenue
each applicable individual by that date. for each approval or other act causing Service, Tax Forms and Publications
2. Any person subject to liability for the organization to be a party to the Division, 1111 Constitution Ave. NW,
the tax exercised reasonable diligence prohibited tax shelter transaction. IR-6526, Washington, DC 20224. Do
to meet the notice requirement and not send Form 5330 to this address.
corrects the failure within 30 days after Privacy Act and Paperwork Reduc- Instead, see Where To File, earlier.
the employer (or other person tion Act Notice. We ask for the

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Index
 
                             Investment advice    9       Private delivery services 2
A                                                         Prohibited allocation:        S
Amended return   3 6,                                        Disqualified person  5     Section 403(b) plan              6
Amount involved  5           L                               ESOP     4                 Section 4965  5 12, 
                             Late filing 3                   Nonallocation period   4   Section 4971(a)  9
                               Interest  2                   Synthetic equity 4         Section 4971(b)  9
C                              Penalty   3                   Worker-owned               Section 4971(f) 10
Claim for refund 3           Late payment  3                 cooperative    4           Section 4971(g)  10
                             Liquidity shortfall:         Prohibited reportable         Section 4971(g)(2)               5
                               Additional tax 10             transaction 5              Section 4971(g)(3)               10
D                            Listed transaction   5       Prohibited tax shelter        Section 4971(g)(4)               10
Disqualified benefit, funded                                 transaction 5              Section 4972  6
  welfare plans  4                                           Entity manager  5          Section 4973(a)(3)               6
Disqualified person 9        M                               Required disclosure  6     Section 4975  6
Due dates  2                 Minimum funding standards,   Prohibited transaction  6     Section 4976  4
                               failure 9                     Correcting  9              Section 4977  11
                                                             Correction period  9       Section 4979  11
E                                                            Definition 7               Section 4979A  4
Eligible investment advice   N                               Disqualified person  7     Section 4980  11
  arrangement    9           Nonallocation period   4        Exemptions   7             Section 4980F  11
Employer reversion  11       Nondeductible employer          Failure to correct 8       Summary of taxes due               4
Entity manager 5               contributions 6               Investment advice   9      Synthetic equity 4
ESOP 4                         Exception, defined benefit Purpose of form  1             Amount involved                 5
  Prohibited allocations 4     plan      6
ESOP dispositions  4           Exception, defined 
Excess contributions:          contribution plan    6     Q                             T
  403(b)(7) plans  6           Nondeductible              Qualified ESOP securities   4 Table of due dates               2
  Section 4979   11            contributions      6
Excise tax due dates  2 4,     Qualified plan 6
Extension  2                 Notice of significant        R                             W
                               reduction in future        Required disclosure:          When to file 2
                               accruals   11                 Prohibited tax shelter     Where to file 2
F                              Applicable individual  12     transaction    6           Who must file 1
Form 5558  2                                              Reversion of qualified plan   Worker-owned 
Funded welfare plans  4                                      assets   11                 cooperative   4
                             P                               Qualified plan 11
                             Payment of taxes     6          Terminated defined 
I                            Penalty 2 3,                    benefit plan   11
Interest 2                     Late payment   3

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