Title 26 — Internal Revenue Code
Chapter 43 — Qualified Pension, Etc., Plans
§ 4974. Excise tax on certain accumulations in qualified retirement plans
Statutory text
General rule
If the amount distributed during the taxable year of the payee under any qualified retirement plan or any eligible deferred compensation plan (as defined in section 457(b)) is less than the minimum required distribution for such taxable year, there is hereby imposed a tax equal to 25 percent of the amount by which such minimum required distribution exceeds the actual amount distributed during the taxable year. The tax imposed by this section shall be paid by the payee.
Minimum required distribution
For purposes of this section, the term “minimum required distribution” means the minimum amount required to be distributed during a taxable year under section 401(a)(9), 403(b)(10), 408(a)(6), 408(b)(3), or 457(d)(2), as the case may be, as determined under regulations prescribed by the Secretary.
Qualified retirement plan
For purposes of this section, the term “qualified retirement plan” means—
a plan described in section 401(a) which includes a trust exempt from tax under section 501(a),
an annuity plan described in section 403(a),
an annuity contract described in section 403(b),
an individual retirement account described in section 408(a), or
an individual retirement annuity described in section 408(b).
Such term includes any plan, contract, account, or annuity which, at any time, has been determined by the Secretary to be such a plan, contract, account, or annuity.
Waiver of tax in certain cases
If the taxpayer establishes to the satisfaction of the Secretary that—
the shortfall described in subsection (a) in the amount distributed during any taxable year was due to reasonable error, and
reasonable steps are being taken to remedy the shortfall,
the Secretary may waive the tax imposed by subsection (a) for the taxable year.
Reduction of tax in certain cases
Reduction
In the case of a taxpayer who—
receives a distribution, during the correction window, of the amount which resulted in imposition of a tax under subsection (a) from the same plan to which such tax relates, and
submits a return, during the correction window, reflecting such tax (as modified by this subsection),
the first sentence of subsection (a) shall be applied by substituting “10 percent” for “25 percent”.
Correction window
For purposes of this subsection, the term “correction window” means the period of time beginning on the date on which the tax under subsection (a) is imposed with respect to a shortfall of distributions from a plan described in subsection (a), and ending on the earliest of—
the date of mailing a notice of deficiency with respect to the tax imposed by subsection (a) under section 6212,
the date on which the tax imposed by subsection (a) is assessed, or
the last day of the second taxable year that begins after the end of the taxable year in which the tax under subsection (a) is imposed.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Employee Retirement Income Security Act of 1974
Pub. L. 93–406 title II § 2002(e) · 88 Stat. 829
Enacted · 26 U.S.C. § 4974
Added Pub. L. 93–406, title II, § 2002(e), Sept. 2, 1974, 88 Stat. 967
Source evidence
Code source credit
Added Pub. L. 93–406, title II, § 2002(e), Sept. 2, 1974, 88 Stat. 967Enacted provision · exact public law section
(e) Excise Tax on Excessive Accumulations.— Chapter 43 is amended by inserting after section 4973 the following new section: “SEC. 4974. EXCISE TAX ON CERTAIN ACCUMULATIONS IN INDIVIDUAL RETIREMENT ACCOUNTS OR ANNUITIES. “(a) Imposition of Tax.— If, in the case of an individual retirement account or individual retirement annuity, the amount distributed during the taxable year of the payee is less than the minimum amount required to be distributed under section 408(a)(6) or (7), or 408(b)(3) Ante, p. 959. or (4) during such year, there is imposed a tax equal to 50 percent of the amount by which the minimum amount required to be distributed during such year exceeds the amount actually distributed during the year. The tax imposed by this section shall be paid by such payee. “(b) Regulations.— For purposes of this section, the minimum amount required to be distributed during a taxable year under section 408(a)(6) or (7) or 408(b)(3) or (4) shall be determined under regulations prescribed by the Secretary or his delegate.”.Pub. L. 94–455 title XIX § 1906(b)(13)(A) · 90 Stat. 1520
Struck · 26 U.S.C. § 4974(b)
Pub. L. 94–455 struck out “or his delegate” after “Secretary”
Source evidence
Code amendment note
Subsec. (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.Enacted provision · exact public law section
(A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.Pub. L. 95–600 title I § 157(i)(1) · 92 Stat. 2763
Added · 26 U.S.C. § 4974(c)
Pub. L. 95–600 added subsec. (c)
Source evidence
Code amendment note
Subsec. (c). Pub. L. 95–600 added subsec. (c).Enacted provision · exact public law section
(1) 26 USC 4974. General rule.— Section 4974 (relating to excise tax on certain accumulations in individual retirement accounts or annuities) is amended by adding at the end thereof the following new subsection: “(c) Waiver of Tax in Certain Cases.— If the taxpayer establishes to the satisfaction of the Secretary that— “(1) the shortfall described in subsection (a) in the amount distributed during any taxable year was due to reasonable error, and “(2) reasonable steps are being taken to remedy the shortfall, the Secretary may waive the tax imposed by subsection (a) for the taxable year.”Tax Reform Act of 1986
Pub. L. 99–514 § 1121(a)(1) · 100 Stat. 2085
Amended · 26 U.S.C. § 4974
Pub. L. 99–514, § 1121(a)(1), amended section generally
Substituted · 26 U.S.C. § 4974
Pub. L. 99–514, § 1121(a)(1), substituting provisions imposing an excise tax on certain accumulations in qualified retirement plans for provisions imposing an excise tax on certain accumulations in individual retirement accounts and annuities
Source evidence
Code amendment note
Pub. L. 99–514, § 1121(a)(1), amended section generally, substituting provisions imposing an excise tax on certain accumulations in qualified retirement plans for provisions imposing an excise tax on certain accumulations in individual retirement accounts and annuities.Enacted provision · exact public law section
(1) In general.— Section 4974 is amended to read as follows: “SEC. 1974. EXCISE TAX ON CERTAIN ACCUMULATIONS IN QUALIFIED RETIREMENT PLANS. “(a) General Rule.— If the amount distributed during the taxable year of the payee under any qualified retirement plan or any eligible deferred compensation plan (as defined in section 457(b)) is less than the minimum required distribution for such taxable year, there is hereby imposed a tax equal to 50 percent of the amount by which such minimum required distribution exceeds the actual amount distributed during the taxable year. The tax imposed by this section shall be paid by the payee. “(b) Minimum Required Distribution.— For purposes of this section, the term ‘minimum required distribution’ means the minimum amount required to be distributed during a taxable year under section 401(a)(9), 403(b)(10), 408(a)(6), 408(b)(3), or 457(d)(2), as the case may be, as determined under regulations prescribed by the Secretary. “(c) Qualified Retirement Plan.— For purposes of this section, the term ’qualified retirement plan’ means— “(1) a plan described in section 401(a) which includes a trust exempt from tax under section 501(a), “(2) an annuity plan described in section 403(a), “(3) an annuity contract described in section 403(b), “(4) an individual retirement account described in section 408(a), or “(5) an individual retirement annuity described in section 408(b). Such term includes any plan, contract, account, or annuity which, at any time, has been determined by the Secretary to be such a plan, contract, account, or annuity. “(d) Waiver of Tax in Certain Cases.— If the taxpayer establishes to the satisfaction of the Secretary that— “(1) the shortfall described in subsection (a) in the amount distributed during any taxable year was due to reasonable error, and “(2) reasonable steps are being taken to remedy the shortfall, the Secretary may waive the tax imposed by subsection (a) for the taxable year.”Tax Reform Act of 1986
Pub. L. 99–514 § 1852(a)(7)(B) · 100 Stat. 2085
Substituted · 26 U.S.C. § 4974(a)
Pub. L. 99–514, § 1852(a)(7)(B), substituted “section 408(a)(6) or 408(b)(3)” for “section 408(a)(6) or (7), or 408(b)(3) or (4)”
Source evidence
Code amendment note
Subsec. (a). Pub. L. 99–514, § 1852(a)(7)(B), substituted “section 408(a)(6) or 408(b)(3)” for “section 408(a)(6) or (7), or 408(b)(3) or (4)”.Enacted provision · exact public law section
(B) Subsection (a) of section 4974 (relating to excise tax on certain accumulations in individual retirement accounts or annuities) is amended by striking out “section 408(a) (6) or (7), or 408(b) (3) or (4)” and inserting in lieu thereof “section 408(a)(6) or 408(b)(3)”.Tax Reform Act of 1986
Pub. L. 99–514 § 1852(a)(7)(C) · 100 Stat. 2085
Substituted · 26 U.S.C. § 4974(b)
Pub. L. 99–514, § 1852(a)(7)(C), substituted “section 408(a)(6) or 408(b)(3)” for “section 408(a)(6) or (7) or 408(b)(3) or (4)”
Source evidence
Code amendment note
Subsec. (b). Pub. L. 99–514, § 1852(a)(7)(C), substituted “section 408(a)(6) or 408(b)(3)” for “section 408(a)(6) or (7) or 408(b)(3) or (4)”.Enacted provision · exact public law section
(C) Subsection (b) of section 4974 is amended by striking out “section 408(a) (6) or (7) or 408(b) (3) or (4)” and inserting in lieu thereof “section 408(a)(6) or 408(b)(3)”.Energy and Water Development and Related Agencies Appropriations Act, 2023
Pub. L. 117–328 § 302(a) · 136 Stat. 4459
Substituted · 26 U.S.C. § 4974(a)
Pub. L. 117–328, § 302(a), substituted “25 percent” for “50 percent”
Source evidence
Code amendment note
Subsec. (a). Pub. L. 117–328, § 302(a), substituted “25 percent” for “50 percent”.Enacted provision · exact public law section
Sec. 302. Funds appropriated by this or any other Act, or made available by the transfer of funds in this Act, for intelligence activities are deemed to be specifically authorized by the Congress for purposes of section 504 of the National Security Act of 1947 (50 U.S.C. 3094) during fiscal year 2023 until the enactment of the Intelligence Authorization Act for fiscal year 2023.Effective date note
Pub. L. 117–328, div. T, title III, § 302(c), Dec. 29, 2022, 136 Stat. 5339, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Dec. 29, 2022].”Energy and Water Development and Related Agencies Appropriations Act, 2023
Pub. L. 117–328 § 302(b) · 136 Stat. 4459
Added · 26 U.S.C. § 4974(e)
Pub. L. 117–328, § 302(b), added subsec. (e)
Source evidence
Code amendment note
Subsec. (e). Pub. L. 117–328, § 302(b), added subsec. (e).Enacted provision · exact public law section
Sec. 302. Funds appropriated by this or any other Act, or made available by the transfer of funds in this Act, for intelligence activities are deemed to be specifically authorized by the Congress for purposes of section 504 of the National Security Act of 1947 (50 U.S.C. 3094) during fiscal year 2023 until the enactment of the Intelligence Authorization Act for fiscal year 2023.Effective date note
Pub. L. 117–328, div. T, title III, § 302(c), Dec. 29, 2022, 136 Stat. 5339, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Dec. 29, 2022].”
9 of 9 references resolved to an enrolled provision
Editorial Notes
Amendments1976–2022 · 4 rounds
2022
Subsec. (a). Pub. L. 117–328, § 302(a), substituted “25 percent” for “50 percent”.
Subsec. (e). Pub. L. 117–328, § 302(b), added subsec. (e).
1986
Pub. L. 99–514, § 1121(a)(1), amended section generally, substituting provisions imposing an excise tax on certain accumulations in qualified retirement plans for provisions imposing an excise tax on certain accumulations in individual retirement accounts and annuities.
Subsec. (a). Pub. L. 99–514, § 1852(a)(7)(B), substituted “section 408(a)(6) or 408(b)(3)” for “section 408(a)(6) or (7), or 408(b)(3) or (4)”.
Subsec. (b). Pub. L. 99–514, § 1852(a)(7)(C), substituted “section 408(a)(6) or 408(b)(3)” for “section 408(a)(6) or (7) or 408(b)(3) or (4)”.
1978
Subsec. (c). Pub. L. 95–600 added subsec. (c).
1976
Subsec. (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.
Statutory Notes and Related Subsidiaries
Effective Date of 2022 Amendment
Pub. L. 117–328, div. T, title III, § 302(c), , 136 Stat. 5339, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [].”
Effective Date of 1986 Amendment
Amendment by section 1121(a)(1) of Pub. L. 99–514 applicable to years beginning after , with special provisions for plans maintained pursuant to collective bargaining agreements ratified before , and transition rules, see section 1121(d) of Pub. L. 99–514, set out as a note under section 401 of this title.
Amendment by section 1852(a)(7)(B), (C) of Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.
Effective Date of 1978 Amendment
Pub. L. 95–600, title I, § 157(i)(2), , 92 Stat. 2809, provided that: “The amendment made by paragraph (1) [amending this section] shall apply to taxable years beginning after .”
Effective Date
Section effective , see section 2002(i)(2) of Pub. L. 93–406, set out as an Effective Date note under section 4973 of this title.
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after , see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.
Credits
1974–2022 · 5 acts
- 1974Added Pub. L. 93–406, title II, § 2002(e), , 88 Stat. 967
- 1976amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), , 90 Stat. 1834
- 1978Pub. L. 95–600, title I, § 157(i)(1), , 92 Stat. 2808
- 1986Pub. L. 99–514, title XI, § 1121(a)(1), title XVIII, § 1852(a)(7)(B), (C), , 100 Stat. 2464, 2866
- 2022Pub. L. 117–328, div. T, title III, § 302(a), (b), , 136 Stat. 5339.
Show as published
(Added Pub. L. 93–406, title II, § 2002(e), , 88 Stat. 967; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), , 90 Stat. 1834; Pub. L. 95–600, title I, § 157(i)(1), , 92 Stat. 2808; Pub. L. 99–514, title XI, § 1121(a)(1), title XVIII, § 1852(a)(7)(B), (C), , 100 Stat. 2464, 2866; Pub. L. 117–328, div. T, title III, § 302(a), (b), , 136 Stat. 5339.)