5330 line 3b

HI ~ Looking for some guidance- amount on line 3b of 5300 for penalty?

I have a client with late deferrals for 1 participants from 2018.  The amount is small and we are not filing through VFCP.  I have calculated the lost earning using the participants rate of return.  I am completing the 5330.  Line 3b is a 100% tax on the failure to correct.  If I'm reading this correctly, if the prohibited transaction is not corrected within the taxable period, an amount equal to 100% of the 'amount involved' is imposed.  If my lost earnings are $50.  My excise tax is $7.50.  Since it was not corrected until 2019 the penalty is $50.  Total due with 5330 $57.50 .

Thanks!

Years ago I asked the IRS what value should we put in Line 3b.  We were told that you leave 3b blank.  If that additional tax is going to be charged, the IRS will contact you on that topic.  To be clear, using your numbers from above, the excise tax will be $7.50 which is listed on Line 3a.  There will be no entry on Line 3b.  I note that over many years this has been our practice, and we have never been contacted about a 4975(b) tax.

Thank you Below Ground

You are most welcome.  No sense in you being on hold for hours to get the same answer I got.