Form 5330 is an IRS document commonly used to report excise taxes for 401(k) plans. If plan sponsors or administrators delay a 401(k) participant’s deposit, interfering with earnings and investments, they must pay an excise tax based on the missing earnings and report the amount to the IRS.
If you want to know more details about this IRS document, here you will find all the information about it, including a guide on how to fill out Form 5330.
What is the Form 5330?
As mentioned before, the Form 5330 is a tool used to report and pay the excise tax related to employee benefit plans.
Filing this form is required for a variety of prohibited actions or violations that may be committed by benefit plan participants, administrators, and sponsors. These violations include:
- Prohibited tax shelter transactions and disqualified benefits.
- Excess benefits and contributions.
- Improper payments.
- Failure to comply with rehabilitation actions.
- Prohibited allocations.
- Violation of notice requirements or deposit deadlines.
Who should file a 5330 form?
Form 5330 must be completed any time an employer fails to make payments according to benefit plan rules or if there is a reversal of plan assets as described in section 4980.
According to the IRS, those who must file this form are:
- The administrator of the plan company that made the mistake.
- A plan administrator acting on behalf of a plan sponsor.
- The responsible employer.
- A specific employer who breached the terms of a multiemployer plan.
When should I file Form 5330?
The filing deadline for Form 5330 depends on each excise tax and the reasons for the violation.
Let’s take a look at the sections under which excise taxes are due and the deadline by section:
- Section 4965: the 15th day of the 5th month following the closing of the agreed fiscal year.
- Section 4971: the 15th day of the 10th month after the last day of the plan year.
- Sections 4971(f) / 4971(g)(2) / 4971(g)(3) / 4971(g)(4): same deadline as section 4971.
- Section 4972: the last day of the 7th month after the close of the tax year.
- Section 4973(a)(3): the last day of the 7th month after the close of the applicable tax year.
- Sections 4975 / 4976 / 4977 / 4978: the last day of the 7th month after the close of the applicable tax year.
- Section 4979: the last day of the 15th month after the close of the plan year.
- Section 4979(a): the last day of the 7th month after the end of the tax year.
- Section 4980: the last day of the month following the month in which the reversion occurred.
- Section 4980(f): the last day of the month following the month in which the failure occurred.
If the filing due date is on Saturday, Sunday, or holiday, the return may be filed on the following business day.
How to fill out a 5330 form
This IRS form can be filed on paper. To do so, you need to download and print the Form 5330, which is found on the official IRS website. You can download the form directly, by clicking here. Remember that you can complete the form with a pen or typewriter, but it must be in black or blue ink.
Once completed, you must sign and mail the form to the following address:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201
Interest and penalties
The IRS will charge interest when plan sponsors or administrators fail to pay their liability on time, regardless of filing extensions. Interest rates are determined by section 6601.
If you do not file a return on time, you will have to pay a monthly penalty of 5%, up to a maximum of 25% of the total due tax. In addition, if you do not pay the tax when it is due, you will have to pay a penalty of ½ of 1% per month, up to 25% of the total due tax.
Claim for Refund or Credit/Amended Return
The plan sponsor can make claims on an amended Form 5330 in the event you need to:
- Claim a refund for overpayment.
- Receive a credit for overpaid taxes.
Keep in mind that when filing an amended return to claim a refund or credit, you must explain the reasons for the amendment in clear detail and provide supporting evidence.
Frequently Asked Questions
What is a 401(k)?
According to the IRS, a 401(k) is a retirement savings plan sponsored by American employers that has tax advantages to the saver.
Is it possible to extend the deadline for filing Form 5330?
Yes, it is possible to get an extension of up to 6 months after the normal Form 5330 deadline.