Employee Plans Compliance Unit (EPCU) - Current Projects - Form 5330 - Prohibited Transactions (PTs) |
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Background: We are contacting taxpayers who have filed a Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, reporting prohibited transaction excise taxes imposed by section 4975 of the Internal Revenue Code. A prohibited transaction involves any transfer or use of pension assets for the benefit of a disqualified person (as defined in section 4975 of the Code). These include a wide range of transactions, such as: improper loans or extensions of credit, excessive payments for services provided to the plan, late deposits of elective deferrals to the plan trust, and sales of property or goods.
The Project Process: We selected a variety of filed Form 5330 returns, representing varying types of plans and transactions. The primary goal is to verify the tax is computed accurately and the correction of the prohibited transaction has been completed properly.
If You Receive A Letter: Please provide the information requested in the defined benefit plan letter or the defined contribution letter. You may also furnish any other documents or clarifying material that you believe will be helpful for us to review. You should make every effort to be as complete and accurate as possible in your responses. This is an examination of your Form 5330, Return of Excise Tax Related to Employee Benefit Plans. Accordingly, we will inspect your books and records to determine your proper excise tax liability with respect to a particular tax period. As a result, adjustments to the amount of excise tax, penalties, interest, or other impact upon the disqualified person and/or the plan and its sponsor may occur.
Did You Receive a 1562-K letter concerning the untimely deposits of elective deferrals in your 401(k) plan? If so, take a look at our 401(k) Untimely Deferral Deposit Compliance Checks web page.
If You Have Questions: Please feel free to e-mail us and we will be glad to answer any questions you have about the project and how it relates to your situation. Please include the “5330 PT Project” in the Subject line of the message.
Other Resources:
Form 2848 (Instructions), Power of Attorney and Declaration of Representative
Form 5330 Corner – EP internet page which includes a list of common errors made when completing Form 5330.
Retirement Plans FAQ Regarding Plan Investments – includes the definitions of “Prohibited Transaction” and “Disqualified Person” and describes consequences and corrections for prohibited transactions.
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Page Last Reviewed or Updated: December 05, 2008