Form 5330

Form 5330 is used to report and pay excise taxes related to various issues in employee benefit plan administration, including prohibited transactions, late non-discrimination testing refunds, and other problems that may occur in qualified retirement plans 

Why is Form 5330 important?

Form 5330 serves as a critical reporting mechanism for assessing excise taxes due to the IRS as a result of plan failures, including engaging in prohibited transactions. These transactions, such as self-dealing or improper use of plan assets (including late contributions), can jeopardize the plan's tax-exempt status. By filing Form 5330 and paying appropriate excise taxes, plan sponsors maintain compliance while protecting participant interests through transparent administration. Failure to file or address underlying issues can result in substantial penalties or plan disqualification.

Who determines the excise tax and prepares Form 5330?

The responsibility for assessing excise taxes lies with the IRS. Fiduciaries and third party administrators can assist with preparing Form 5330s, if required. Note that if the plan sponsor is not preparing the form, the paid preparer is required to report their preparer tax identification number (PTIN) on the form. Many plan sponsors seek assistance from tax professionals or benefits consultants who specialize in Form 5330 compliance to ensure accurate calculations and proper identification of taxable events.

What is the deadline for filing Form 5330

The Form 5330 is used to report multiple taxes to the IRS, and each code section has its own due date. These are the most common: 

• Late employee contributions (section 4975): Due 7 months after end of tax year

• Late ADP/ACP refunds (section 4979): Due 15 months after close of plan year

If you are using Form 5330 to pay excise taxes on multiple issues, you can only file those with the same due date together. Plan sponsors can request up to a six-month extension using Form 8868 before the original due date as long as you file it on time. If you are granted a time extension, you can extend the normal deadline for submitting Form 5330 to up to six months. Note that you must file a separate Form 8868 for each excise tax that has a different filing due date for Form 5330. Additionally, if you do file an extension, you have to pay your estimated excise tax with your extension.