Jump to content

Form 5330 not extended - what to do?


M Norton

Recommended Posts

Audited 401(k) - auditors found missed deposit of deferrals.

TPA is calculating lost earnings, and plan sponsor will deposit missed deferrals plus lost earnings.

Client will file Form 5330.

But - when Form 5558 was prepared and filed, the problem had not been discovered so the 5330 was not extended.

Will the Form 5330 be rejected?

 

Link to comment
Share on other sites

You need to attach an explanation of reasonable cause for why it is late. They will cash your check and likely send a letter for penalties and interest.

Instructions for Form 5330 (12/2020) | Internal Revenue Service (irs.gov)

Quote

 

Interest and Penalties

Interest.

 

Interest is charged on taxes not paid by the due date even if an extension of time to file is granted. Interest is also charged on penalties imposed from the due date, including extensions, to the date of payment for failure to file, negligence, fraud, gross valuation overstatements, and substantial understatements of tax. The interest rate is determined under section 6621.

Penalty for late filing of return.

 

If you do not file a return by the due date, including extensions, you may have to pay a penalty of 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. The minimum penalty for a return that is more than 60 days late is the smaller of the tax due or $435. The penalty will not be imposed if you can show that the failure to file on time was due to reasonable cause. If you file late, you must attach a statement to Form 5330 explaining the reasonable cause.

Penalty for late payment of tax.

 

If you do not pay the tax when due, you may have to pay a penalty of ½ of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. The penalty will not be imposed if you can show that the failure to pay on time was due to reasonable cause.

Interest and penalties for late filing and late payment will be billed separately after the return is filed.

 

 

Link to comment
Share on other sites

In my experience with Form 5330 filings, mostly for Unpaid [DB] Contributions or Prohibited Transactions,  more often than not, the filing was done long after the "filing deadline"  -- typically because the filing deadline would be July 31, but we would not know about Unpaid Contributions until after the Sept. 15 minimum funding deadline.   I am unaware of our ever "extending" the 5330 filing deadline, nor any penalty assessed for "late filing" of Form 5330.    IRS will certainly not "reject" any Form 5330 filing just for being "late".

 

....  Jeff

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...