Form 5330 - Excise tax on late deposit of deferrals

[MarZDoates]

401(k) Plan reported on Form 5500 for 2001 and 2004 amounts of 401(k) deferrals and loan repayments that were not deposited timely. (As many as 55 days late.)

Plan underwent a DOL audit. Auditor calculated lost opportunity cost and lost interest for each late payment. Plan Administrator deposited the lost earnings early in 2006 at the conclusion of the audit as per the DOL’s calculation.

We are now calculating the excise tax due. If I understand correctly, the excise tax is 15% of the lost earnings/opportunity cost. Is that correct?

Now, my real question: Do we have to file two Forms 5330, one for 2001 and one for 2004? If so, wouldn’t they both be considered delinquent, creating additional penalties? Also, instead of completing Part IV manually, can we just attach the spreadsheet showing each date and amount?

Thanks for any and all responses.

[MarZDoates]

I would like to reflag this post. Any ideas? Thanks.

[E as in ERISA]

Since lost earnigns are the issue an dyou didn't deposit them until 2006, then I believe that technically you are required to file 2001, 2002, 2003, 2004, 2005, and 2006.

[Archimage]

You have to file a 5330 for 2001 thru 2006, every year that involved a prohibited transaction.

[E as in ERISA]

And the IRS has a new Employee Plans Compliance Unit that is specifically targeting Form 5330s. So most people might have just filed one 5330 for year of correction in the past. But now the IRS is looking for excise taxes for all years with each year being a discrete transaction for successive years' filing.

[Archimage]

And to answer your other question, yes the 5330s are late. I believe they are due 7 months followings the end of the plan year. The late fees are calculated kinda funny. I always file as normal and wait for the IRS to calculate the fee and request it. It seems that 90% of the time they don't even worry about the late fee and never request it.