Form 5330 Instructions: Excise Taxes, Deadlines, and E-Filing

Form 5330 is the IRS return used to report and pay excise taxes tied to employee benefit plans, including qualified retirement plans and certain tax-advantaged accounts. The instructions for Form 5330 divide these excise taxes into two groups with different deadlines, assign filing responsibility to different parties depending on the violation, and apply a two-tier structure that escalates sharply if the underlying problem is not corrected. Whether you file depends less on the form itself and more on which code section you have run afoul of.

Who Files and Why

The filer is whoever the statute holds responsible for the specific violation. For a prohibited transaction under Section 4975, the disqualified person who entered the transaction files and pays. For a minimum funding shortfall under Section 4971, the employer files. For excess contributions that fail nondiscrimination testing under Section 4979, the employer files. For excess contributions to a 403(b)(7)(A) custodial account under Section 4973, the account holder files.

These excise taxes function as penalties designed to force correction, not to raise revenue. That framing matters when you read the rest of the instructions, because the deadlines, the two-tier rates, and the availability of relief all point toward one outcome: fix the problem, and fix it before the IRS acts.

Filing Deadlines

Form 5330 does not have a single due date. The form splits excise taxes into two schedules with two different deadlines.

Excise taxes reported in Section A, including the prohibited transaction tax under Section 4975, are due by the last day of the seventh month after the end of the filer’s tax year. For a calendar-year filer, that is July 31 of the following year.¹

Excise taxes reported in Section B, including the minimum funding deficiency tax under Section 4971, are due by the 15th day of the 10th month after the last day of the plan year. For a plan year ending December 31, that is October 15 of the following year.¹

If you need more time, file Form 8868 before the original due date to request an extension of up to six months. Form 5558 no longer applies to Form 5330. The extension covers the filing deadline only. You still owe any estimated tax by the original due date, and if a single return carries taxes with different due dates, you need a separate Form 8868 for each due date.²

Mandatory Electronic Filing

For tax years ending on or after December 31, 2023, you must file Form 5330 electronically if you are required to file at least 10 returns of any type during the calendar year the Form 5330 is due. The threshold counts all return types, not just Form 5330.³ Electronic filing runs through the IRS Modernized e-File system with an authorized e-file provider.

If you were required to e-file and did not, the IRS treats the return as unfiled and assesses failure-to-file penalties and interest.³ Filers below the threshold are encouraged to e-file anyway.⁴

Prohibited Transaction Tax Under Section 4975

Section 4975 bars specific dealings between a plan and anyone classified as a disqualified person. The disqualified person who participated owes the tax and files. The calculation appears in Part II, Schedule C.

Disqualified persons include any plan fiduciary, anyone providing services to the plan, any employer whose employees are covered, and any employee organization whose members participate. The category extends to 50-percent-or-greater owners of such an employer or employee organization, officers, directors, and highly compensated employees earning 10 percent or more of the employer’s yearly wages. Family members of these individuals are also disqualified persons, as are corporations, partnerships, and trusts in which disqualified persons hold a 50 percent or greater interest.⁵

The prohibited acts include any direct or indirect sale, exchange, or lease of property between a plan and a disqualified person; lending or extension of credit between them; providing goods, services, or facilities between them; any transfer of plan income or assets for the benefit of a disqualified person; and a fiduciary dealing with plan assets for personal benefit or receiving compensation from a party doing business with the plan. Participant loans meeting specific conditions, reasonable compensation for necessary services, bank deposits at reasonable rates, certain insurance contracts, and certain ESOP loans are exempt.⁶

First-Tier Tax: 15 Percent

The initial excise tax is 15 percent of the amount involved for each year, or partial year, in the taxable period.⁶ Report the tax for the year that includes the transaction date and for every subsequent year that ends before the correction date. If the transaction sits uncorrected across several years, you owe 15 percent on the amount involved for each of those years.

Amount involved is the greater of the money and fair market value of property given, or the money and fair market value of property received. For the first-tier tax, fair market value is measured as of the date the transaction occurred. When a disqualified person receives compensation for services that would otherwise be exempt, the amount involved is only the portion exceeding reasonable pay.⁶

Second-Tier Tax: 100 Percent

If the transaction is not corrected within the taxable period, a second-tier tax of 100 percent of the amount involved applies. For this calculation, the amount involved is measured at its highest fair market value during the taxable period, which can produce a figure much larger than the first-tier base.⁶

The taxable period begins on the date of the transaction and ends on the earliest of three events: when the IRS mails a notice of deficiency for the first-tier tax, when the first-tier tax is assessed, or when the correction is completed.⁵ Once the period closes without correction, the 100 percent tax attaches.

Correction means undoing the transaction to the extent possible and placing the plan in a financial position no worse than if the disqualified person had acted under the highest fiduciary standards.⁵ Returning the property or money is not enough if the plan lost investment gains while the transaction was outstanding.

Minimum Funding Deficiency Tax Under Section 4971

When an employer maintains a defined benefit plan or other plan subject to minimum funding rules and misses the required contributions, Section 4971 applies. The employer files, using Part II, Schedule D. The initial rate depends on the plan type:

Single-employer plans: 10 percent of the aggregate unpaid minimum required contributions for all plan years remaining unpaid as of the end of any plan year ending within the taxable year.
Multiemployer plans: 5 percent of the accumulated funding deficiency as of the end of the plan year.
CSEC plans: 10 percent of the accumulated funding deficiency as of the end of the plan year.

These rates come directly from the statute.⁷ Enter the unpaid amount on the applicable line of Schedule D and apply the rate.

If the shortfall remains uncorrected through the end of the taxable period after the initial tax is imposed, a second-tier tax of 100 percent of the uncorrected amount applies.⁷ Report the 100 percent tax on a separate Form 5330 filed after the IRS issues a notice of deficiency for the initial tax.

Excess Contribution Taxes

Two distinct excess contribution taxes flow through Form 5330 under different code sections. The rates, the responsible party, and the accounts covered differ, so getting the section right matters.

Section 4979: Failed Nondiscrimination Testing

When a 401(k), 403(b), SEP, or other qualified plan fails nondiscrimination testing, the resulting excess contributions and excess aggregate contributions face a 10 percent excise tax on the employer.⁸ The tax is avoided entirely if the excess is distributed to affected participants within 2½ months after the end of the plan year. The 10 percent applies only when that corrective distribution deadline is missed.

Section 4973: 403(b)(7)(A) Custodial Account Excess

A 6 percent excise tax applies to excess contributions in 403(b)(7)(A) custodial accounts. Section 4973 covers a broader set of accounts, but the only piece of that tax reported on Form 5330 is the 403(b)(7)(A) portion.¹ The 6 percent recurs each year the excess remains in the account.⁹

What Belongs on Form 5329 Instead

Individual account holders often reach for Form 5330 when the correct form is Form 5329. Excess contributions to IRAs, HSAs, Archer MSAs, Coverdell ESAs, and ABLE accounts are reported on Form 5329, even though they sit under Section 4973.

The excise tax for an individual missing a required minimum distribution is also generally a Form 5329 matter. That tax is 25 percent of the shortfall between what should have been distributed and what was. The rate drops to 10 percent if the shortfall is corrected within a window that ends on the earliest of three dates: when the IRS mails a notice of deficiency, when the tax is assessed, or the last day of the second taxable year beginning after the year the tax was imposed.¹⁰ Plan administrators addressing systematic distribution failures at the plan level should consult the Form 5330 instructions to confirm whether a plan-level filing applies.

Reducing the Tax Through Voluntary Correction

The IRS Employee Plans Compliance Resolution System includes a Voluntary Correction Program that lets plan sponsors request relief from certain excise taxes as part of a negotiated correction. This relief is available under VCP but not under the Self-Correction Program.¹¹ If a plan error would otherwise trigger a Form 5330 filing, applying to VCP before the IRS finds the problem can reduce or eliminate the excise liability.

The tradeoff is a user fee and a more formal correction process. Self-Correction avoids IRS involvement entirely but does not offer excise tax relief.

Late Filing, Late Payment, and Interest

Filing or paying late brings penalties and interest on top of the underlying tax. Interest on underpayments runs from the original due date until the tax is paid. For the quarter beginning April 1, 2026, the underpayment interest rate is 6 percent, compounded daily, and large corporate underpayments face 8 percent.¹² Rates adjust quarterly.

An extension through Form 8868 stops the late-filing penalty clock but not interest on the unpaid tax, which is why the IRS asks you to estimate and pay the tax with the extension request.

Penalties can be abated for reasonable cause, evaluated case by case. Valid grounds include fires, natural disasters, death or serious illness of the taxpayer or an immediate family member, inability to obtain necessary records, and system issues that prevented a timely electronic filing. Not knowing the requirement existed, relying on a tax professional who missed the deadline, or lacking funds do not qualify on their own.¹³

Completing and Submitting the Return

Part I collects identifying information: name, address, and taxpayer identification number of the filer, the plan’s name, its three-digit plan number, and the employer identification number of the plan sponsor. Mark the specific tax year or period clearly.

After calculating each applicable excise tax on the relevant schedule, total the liability and enter the amount due. The disqualified person or employer responsible for the tax signs the return. A paid preparer must also sign and provide a Preparer Tax Identification Number. An unsigned return is treated as incomplete.

Paper returns are mailed to the IRS Service Center in Ogden, UT 84201.⁴ Make checks or money orders payable to the U.S. Treasury, with your identifying information and “Form 5330” written on the payment. The IRS encourages electronic payment through the Electronic Federal Tax Payment System.

If a second-tier tax later becomes due because a prohibited transaction or funding deficiency was not corrected, file a separate Form 5330 for that tax. The subsequent return reports only the 100 percent second-tier tax and references the original transaction date.

1
Internal Revenue Service. Form 5330 – Return of Excise Taxes Related to Employee Benefit Plans
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Internal Revenue Service. Form 5330 Corner
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Internal Revenue Service. Mandatory Electronic Filing for Certain Form 5330 Filers Using the IRS Modernized e-File System (MeF)
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Internal Revenue Service. Instructions for Form 5330
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Office of the Law Revision Counsel. 26 USC 4975 – Tax on Prohibited Transactions
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Office of the Law Revision Counsel. 26 USC 4975 – Tax on Prohibited Transactions
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Office of the Law Revision Counsel. 26 USC 4971 – Taxes on Failure to Meet Minimum Funding Standards
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Office of the Law Revision Counsel. 26 USC 4979 – Tax on Certain Excess Contributions
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Office of the Law Revision Counsel. 26 USC 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities
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Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
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Internal Revenue Service. Voluntary Correction Program – General Description
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Internal Revenue Service. Internal Revenue Bulletin 2026-08
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Internal Revenue Service. Penalty Relief for Reasonable Cause