26 U.S.C. § 4974
§ 4974. Excise tax on certain accumulations in qualified retirement plans
No plain-English explainer yet. Below is the official text. Explainers are being added section by section.
History
Added in 1974 by the Public Law 93-406. Last changed December 29, 2022 by the Consolidated Appropriations Act, 2023 (SECURE 2.0).
Every change, newest first (5)
- December 29, 2022Consolidated Appropriations Act, 2023 (SECURE 2.0)
- October 22, 1986Tax Reform Act of 1986
- November 6, 1978Revenue Act of 1978
- October 4, 1976Tax Reform Act of 1976
- September 2, 1974Public Law 93-406 · added this section
The law as written
Current through Public Law 119-102. Amendment notes omitted.
Structure
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.
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.
For purposes of this section, the term “qualified retirement plan” means—
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.
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.
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”.
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.