Exempt Organizations and Retirement Plans

Two specialized areas: tax-exempt organizations (applying for and keeping 501(c) status, the Form 990 series and unrelated business income) and employer retirement plans (SEP, SIMPLE and 401(k) limits for 2025, highly compensated employees, prohibited transactions and plan reporting). The SEE tests thresholds and due dates in both.

Specialized Returns and Taxpayers4 min read6 sections

Must-know for the exam

Form 990-N is available when gross receipts are normally $50,000 or less; Form 990-EZ requires receipts under $200,000 and assets under $500,000 (IRC 6033(i); Form 990 instructions (2025)).
Failing to file a required Form 990-series return for 3 consecutive years automatically revokes exemption (IRC 6033(j)).
Calendar 2025 Form 990 was due May 15, 2026; Form 8868 gives an automatic 6-month extension (IRC 6072(e); Form 990 instructions (2025)).
Form 990-T is required at $1,000 of gross unrelated business income; UBTI allows a $1,000 specific deduction and corporate UBTI is taxed at 21% (IRC 511, 512(b)(12); Pub. 598).
Filing Form 1023 within 27 months after the end of the month of formation makes 501(c)(3) status retroactive to formation (Treas. Reg. 1.508-1(a)(2); Pub. 557).
2025 401(k) deferral limit is $23,500, plus $7,500 catch-up at 50 or $11,250 at ages 60-63; SIMPLE deferrals $16,500 (IRC 402(g); Notice 2024-80).
2025 SEP limit is the lesser of 25% of compensation or $70,000, with compensation capped at $350,000 (IRC 402(h), 415(c); Pub. 560 (2025)).
SIMPLE IRA plans are for employers with 100 or fewer employees earning $5,000 or more and no other plan (IRC 408(p)(2)(C)-(D)).
For 2025 plan years, an HCE is a 5% owner or someone with 2024 compensation over $155,000 (IRC 414(q); Notice 2023-75).
A prohibited transaction draws a 15% first-tier excise tax, 100% if not corrected (IRC 4975(a)-(b); Pub. 560 (2025)).

On this page · 6 sections

Traps that cost marks

Using the 990-EZ thresholds for the e-Postcard.
Assuming the IRS must send a warning before revocation.
Using the April 15 individual due date.
Using the 990-N gross receipts threshold.
Treating any income of a charity as exempt.
Using a 12- or 15-month window.
Confusing the $250,000 asset limit with the receipts limit.
Applying the lobbying insubstantiality test to campaign activity.

Why it matters on the exam

Domain 3 of Part 2 tests the returns that sit outside ordinary business taxation. For exempt organizations the questions are about which Form 990 to file, when, and what makes income unrelated. For retirement plans they are about the 2025 dollar limits and which plan fits which employer.

Both areas are rich in fixed numbers, so learn the tables.

Exempt organizations: status and filing

Return	Who files
Form 990-N (e-Postcard)	Gross receipts normally $50,000 or less (not private foundations or certain supporting organizations)
Form 990-EZ	Gross receipts under $200,000 and year-end assets under $500,000
Form 990	All others
Form 990-PF	Private foundations, regardless of size
Form 990-T	Gross unrelated business income of $1,000 or more

IRC 6033; Form 990 instructions (2025); Pub. 598.

•Due date: 15th day of the 5th month after year end; May 15, 2026 for calendar 2025.

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Specialized Returns and Taxpayers