What is form 5330?
The Form 5330 has one job – to accompany remittances of certain excise taxes that are associated with qualified retirement plans and 403(b) plans.
Excise taxes?! What kind of excise taxes?
The form lists more than 20 different types of excise taxes that could come into play, but the most common ones are as follows:
| Reason for Excise Tax | Amount of Excise Tax |
| Late deposit of employee deferrals | 15% of the associated lost earnings |
| ADP/ACP test refunds issued more than 2 ½ months after the close of the year | 10% of the refund amount (not including investment gains) |
| Company contribution in excess of the annual tax deduction limit | 10% of the non-deductible contribution amount |
| Failure to meet the minimum funding requirement for a money purchase or defined benefit plan | 10% of the shortfall |
| Reversion of over-funded amounts from a defined benefit plan to the plan sponsor | 50% of the reversion |
Who determines the excise tax and prepares the Form 5330?
The third party administrator for your plan is often able to assist with this process; however, there are some TPAs who will defer to either an accountant or attorney. If someone other than the plan sponsor is preparing the form, that person is required to have a Preparer Tax Identification Number (PTIN) and report it on the form.
In the vast majority of situations, DWC is able to calculate any excise taxes and prepare the Forms 5330 for its clients. Of course, the goal is always to avoid the excise tax in the first place.
What is the deadline for filing the Form 5330?
It depends on the reason for the excise tax. Here is a rundown for the specific transactions noted above:
| Reason for Excise Tax | Amount of Excise Tax |
| Late deposit of employee deferrals | 7 months following the close of the plan year |
| ADP/ACP test refunds issued more than 2 ½ months after the close of the year | 15 months following the close of the plan year |
| Company contribution in excess of the annual tax deduction limit | 7 months following the close of the tax year |
| Failure to meet the minimum funding requirement for a money purchase or defined benefit plan | The later of 7 months following the close of the tax year or 8 ½ months following the close of the plan year |
| Reversion of over-funded amounts from a defined benefit plan to the plan sponsor | Last day of the month of the reversion |
It is possible to extend the deadline by submitting Form 5558 on or before the date the form is otherwise due; however, the estimated excise tax is required to be paid at the time the extension is requested.
Is there a penalty for missing the Form 5330 deadline?
Yes, the penalty is 5% of the unpaid excise tax for each month up to a maximum of 25% of the unpaid tax.
Should I send in that penalty at the same time I file the form and remit the excise tax?
No. The IRS will contact you to arrange payment of any late penalty it assesses.
There has been an increase in telephone scams in which a caller claims to be from the IRS and demands payment of a penalty. It is important to note that that in the event a penalty is assessed, the contact you receive from the IRS will be by letter sent via U.S. mail.
For more information on plan sponsor requirements and deadlines, visit our Knowledge Center.
