IRS Guidance Addresses Form 5330 Filings:

As background, IRS Form 5330 (Return of Excise Taxes Related to Employee Benefit Plans) must be filed, and a related excise tax paid with the filing, for various retirement plan compliance issues. By far the  most common issue for 401(k) plans in this regard is the late remittance of participants’ contributions and loan repayments to a plan.

Under previous IRS guidance, plan sponsors who must file Form 5330 must do so electronically for tax years ending on or after December 31, 2023 if they are required to file at least 10 returns of any type during the calendar year in which the Form 5330 is due. On a year-to-year basis, however, the IRS can elect to waive the requirement to file Form 5330 electronically in cases of undue hardship.

In the July 17 edition of its Employee Plans News publication, the IRS noted that it currently has only one authorized Form 5330 e-file vendor for plan sponsors to use. As a result, the IRS now states that plan sponsors are not required to file Form 5330 electronically for the 2023 taxable year. The IRS also notes that filers should document that the lack of authorized e-file vendors is the reason for filing a paper Form 5330 instead of filing electronically.