Completing Form 5330 for Late Deferrals

[Guest KAGrist]

I am working on a plan that has had problems with late deferrals since its inception in 2000. I understand the calculation for the "amount involved" and the excise tax. My question lies with the completion of the form itself:

1) This company deposited late deferrals multiple times during 2000. Is it necessary for me to list each late deposit on Part VII of the 5330 as a separate Prohibited Transaction?

2) If must list them separately, the form only has 4 lines for entry. The instructions do not state whether to attach another page or include a spreadsheet. Any suggestions?

3) Corrections were completed this month (10/2001) for the late deposits relating to 2000 deferrals, and I realize I must file a 5330 for 2001 also. Can I file this NOW or must I wait until after the end of the taxable year (12/31/2001).

Thanks for your assistance.

KAG

[Alonzo]

1. Yes, list each prohibited transaction. However, note that if a contribution was not made in the first payroll period of the month, and additional contribution was not made in the second payroll period of the month, you have a single prohibited transaction occuring on the 16th business day of the following month.

2. Attaching a spreadsheet is probably fine. That's what I've done in similar circumstances..

3. There's no reason why you couldn't file now. The form doies not have a big "2000" on it.

[KJohnson]

I am generally with Alonzo on the method. However, I am not sure regarding the payroll period issue. DOL regs give the 15th business day as the outside time period when deferrals need to be depositied. Regulations require them to be segregated as soon as feasible. If you "normally" could depost within, say, a week after each payroll, then arguably you could have multiple p.t's in anyone month. If on the other hand, it is only "feasible" to deposit monthly, I agree that the pt would occur as sometime after the end of the month, but no later than the 15th business day following the end of the month.

Even on a monthly method this can get fairly cumbersome when you cross over to the next year.

For example if you have eight months that should have been paid in 2000 and were not paid until 2001 you would have 8 PT's for 2000 and 16 PT's for 2001. You would "repeat" the 2000 PT on on the 2001 5330 form as well as listing 8 "new" PT's beginning on January 1.