Late deposit of Contributions -- class exemption for filing form 5330

I have been under the assumption that as depositing employee contributions and loan payments is a prohibited transaction, that once the correction is made and lost earning restored, that form 5330 needs to be prepared and the excise tax submitted.  However, I was reading that there is a class exemption under the Pension Payback Program that eliminates the need for filing form 5330.  I think this is explained in Amended PTE 2002-51.

I am hoping to get clarification on this class exemption. Thanks!

Without looking up the details of the PTE, my recollection is that you take the amount you would have paid as the excise tax, but pay it to the plan instead. You also have to provide a notice to participants explaining what happened.

There are limits on it; you are only allowed to use it for PTs below a certain dollar amount, and you can't use it if you've done it within the last X years. But in my experience, it's the notice requirement that drives people away from using this. Most employers would rather send the IRS a check for a few bucks than have to tell their employees they messed up the 401(k) plan.