Form 5330 Instructions (Rev. 12-2025): Plan Excise Taxes

Updated October 8, 2026. Quick answer: Form 5330 is the return for excise taxes tied to employee benefit plans, filed by the person or entity liable for the tax, not by the plan. The two most searched taxes are 10% on nondeductible employer contributions (section 4972) and 15% on a prohibited transaction (section 4975), with a further 100% if the transaction is not corrected. For many of them the due date is the last day of the 7th month after the end of the filer’s tax year, and Form 8868 can extend filing by up to 6 months but not payment.

What Form 5330 is and who files it

The IRS opens its purpose statement with “File Form 5330 to report the tax on:” and then lists the sections. Among them: “Nondeductible contributions to qualified plans (section 4972);” “A prohibited transaction (section 4975);” and “Excess contributions to plans with cash or deferred arrangements (section 4979);” The list also includes funding deficiencies, excess fringe benefits, ESOP rules and plan asset reversions.

The filer is the person liable for the tax. Item A on the form says to “Enter the name and address of the employer, individual, or other entity who is liable for the tax.” The instructions then list who must file. For readers with their own retirement accounts, two entries matter. Item 9: “An individual liable for the tax under section 4973(a)” “because an excess contribution to a section 403(b)(7)(A) custodial account was made for them”. Item 10 covers “A disqualified person liable for the tax under section 4975 for participating in a prohibited transaction (other than a fiduciary acting only as such),” or “an individual or the individual’s beneficiary who engages in a prohibited transaction with respect to the individual’s retirement account,” “unless section 408(e)(2)(A) or section 408(e)(4) applies”.

One filing can cover several taxes: “File one Form 5330 to report all excise taxes with the same filing due date. However, if the taxes are from separate plans, file separate forms for each plan.”

The excise taxes, rates and due dates

Part I of the form sorts the taxes by when they are due, and the instructions say “You can only complete one section of Part I for each Form 5330 filed.” The table below pulls the most common ones from the schedules and Table 1 of the instructions. It is not the full list.

Two of these rates are worth reading in the IRS’s own words. On nondeductible contributions: “The excise tax is equal to 10% of the nondeductible contributions in the plan as of the end of the employer’s tax year.” On a 403(b)(7) custodial account: “Section 4973(a) imposes a 6% excise tax on excess contributions to section 403(b)(7)(A) custodial accounts at the close of the tax year.” “The tax is paid by the individual account holder.” The employer-side limits behind a section 4972 or 4979 problem are covered on the pages for 401(k) contribution limits for 2027, the total 401(k) limit for 2026 and the solo 401(k) limit.

Prohibited transactions: what counts as a plan and how the tax grows

Section 4975 reaches more than employer plans. The instructions define “plan” for this purpose to include “An individual retirement account described in section 408(a).” “A Health Savings Account (HSA) described in section 223(d).” It excludes one type: “the term “plan” does not include a section 403(b) tax-sheltered annuity plan.”

The first tier: “The initial tax on a prohibited transaction is 15% of the amount involved in each prohibited transaction for each year or part of a year in the taxable period.” The second tier applies when the transaction stays uncorrected: “If the prohibited transaction is not corrected within the taxable period, an additional tax equal to 100% of the amount involved will be imposed under section 4975(b).” Correction has a defined meaning: “undoing the prohibited transaction to the extent possible, but in any case placing the plan in a financial position not worse than that in which it would be if the disqualified person were acting under the highest fiduciary standards.”

The base for the tax is the amount involved. “The “amount involved in a prohibited transaction” means the greater of the amount of money and the fair market value (FMV) of the other property given, or the amount of money and the FMV of the other property received.” The following is an illustration with made-up amounts, not an IRS example:

In the illustration, 15% of $10,000 is $1,500 for the first tier, and an uncorrected transaction adds 100% of the $10,000 amount involved. The instructions add that a use of money or property can create a new prohibited transaction in each later tax year within the taxable period, so a loan that runs across years is taxed year by year, and each tax year needs its own return: “A disqualified person who engages in a prohibited transaction must file a separate Form 5330 to report the excise tax due under section 4975 for each tax year.”

Employer contribution problems: sections 4972 and 4979

Section 4972 is about contributions the employer cannot deduct. The instructions define the current year’s nondeductible contributions as “The excess (if any) of the employer’s contribution for the tax year less the amount allowable as a deduction under section 404 for that year;” plus unreturned nondeductible amounts from earlier years.

Section 4979 covers excess contributions to cash or deferred arrangements. The instructions say the tax falls on “excess contributions and the excess aggregate contributions made to or on behalf of the highly compensated employees”. There is a way out: “there is no excise tax liability if the excess contributions or the excess aggregate contributions and any income earned on the contributions are distributed” (or forfeited, if forfeitable) to the participants for whom they were made within two and a half months after the end of the plan year. Employers that file Form 5500 for the same plan can see the filing rules on the Form 5500 instructions page.

When to file, extensions and electronic filing

Table 1 sets the due date by section, as shown above. For prohibited transactions and nondeductible contributions the entry reads “last day of the 7th month after the end of the tax year of the employer or other person who must file this return.” The note under the table adds: “If the filing due date falls on a Saturday, Sunday, or legal holiday, the return may be filed on the next business day.”

To extend, “A filer must use Form 8868, Application for Extension of Time To File an Exempt Organization Return or Excise Taxes Related to Employee Benefit Plans, to request for an extension of time to file Form 5330.” The extension is capped: “You may be granted an extension of up to 6 months after the normal due date of Form 5330” if filed on or before the normal due date. The IRS warns that “Form 8868 does not extend the time to pay your taxes.” Interest runs on unpaid tax even when filing is extended.

On electronic filing, the instructions say “must file the excise tax return electronically for tax years ending on or after December 31, 2023, if the filer is required to file at least 10 returns of any type during the calendar year that the Form 5330 is due.” Paper filing is allowed for filers outside that rule. Late-filing and late-payment penalties exist as well: “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.” Neither is imposed if the failure was due to reasonable cause, which the filer can explain in a statement.

How Form 5330 connects to Form 5500

The plan’s annual report sets the filer tax year: use “the plan year beginning and ending dates entered in Part I of Form 5500” (or the tax year of the business return filed). On the limitations period, “statutes of limitations with respect to the prohibited transaction excise tax(es) are based on the filing of the applicable Form 5500”. The annual report itself is covered on the Form 5500 instructions page, the Form 5500 due date page and the Form 5500-EZ page.

Where IRA and RMD penalties fit

This page covers the taxes the Form 5330 instructions list. That list names section 4973 only for 403(b)(7)(A) custodial accounts, and it has no entry for the excise tax on a missed required minimum distribution. Penalties for a missed required minimum distribution or an IRA excess contribution are therefore not among the entries the instructions print, and they have their own pages: Form 5329, a missed RMD of your own, a missed inherited IRA RMD, the RMD calculator and an HSA excess contribution.

Which revision applies

The edition read for this page is the Instructions for Form 5330 (Rev. December 2025), which is the revision irs.gov served when it was read for this page. A later revision can change line numbers, rates or filing rules, so check the revision printed on the form you are filing. “For the latest information about developments related to Form 5330 and its instructions, such as legislation enacted after they were published, go to IRS.gov/Form5330.” Among the items marked new in this edition, the IRS says “A financial institution that is a disqualified person who engaged in a prohibited transaction with respect to multiple IRAs or plans should file only one Form 5330 under that financial institution’s employer identification number (EIN)”.

Common mistakes

• Assuming the plan files Form 5330. The instructions put the return on the employer, individual or other entity liable for the tax, and a prohibited transaction needs a separate return for each tax year.
• Treating the extension as covering payment. Form 8868 can extend filing by up to 6 months, but it does not extend the time to pay, and interest runs from the original due date.
• Looking for a missed RMD or an IRA excess contribution on this form. The printed list of purposes names section 4973(a)(3) only for 403(b)(7)(A) custodial accounts and has no entry for the excise tax on a missed required minimum distribution.

Related: Form 5329, Form 5500 instructions, Form 5500 due date, and total 401(k) contribution limit.

Sources

• Instructions for Form 5330 (Rev. December 2025): https://www.irs.gov/pub/irs-pdf/i5330.pdf
• Form 5330 (Rev. December 2025): https://www.irs.gov/pub/irs-pdf/f5330.pdf

Read from the IRS documents linked above on October 8, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.