26 U.S.C. § 4974 — Excise tax on certain accumulations in qualified retirement plans
submitted 52 years ago by Pub. L. 93-406 to r/title-26-INTERNAL-REVENUE-CODE · 477 words · no verdicts yet
A payee owes a tax when retirement-plan distributions are below the required minimum. The Secretary may waive it for reasonable error, and the rate is reduced when the shortfall is corrected within the stated window.
(a) If a qualified retirement or section 457(b) plan distributes less than the minimum required amount, the payee owes 25 percent of the shortfall. (b) “Minimum required distribution” means the minimum under section 401(a)(9), 403(b)(10), 408(a)(6), 408(b)(3), or 457(d)(2), as applicable, under Secretary* regulations. This section does not define the quoted term. (c) “Qualified retirement plan” means a section 401(a) plan with an exempt trust, section 403(a) annuity plan, section 403(b) contract, section 408(a) account, or section 408(b) annuity, including one the Secretary has determined qualifies. (d) The Secretary may waive the tax if the shortfall was reasonable error and reasonable corrective steps are being taken. (e)(1) If during the correction window the taxpayer* receives the shortfall distribution from the same plan and files a return reflecting the modified tax, use 10 percent instead of 25 percent. (2) The window ends at the earliest of deficiency*-notice mailing, assessment, or the last day of the second taxable year* beginning after the tax year.
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—
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.
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.
Source credit: (Added Pub. L. 93–406, title II, § 2002(e), Sept. 2, 1974, 88 Stat. 967; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 95–600, title I, § 157(i)(1), Nov. 6, 1978, 92 Stat. 2808; Pub. L. 99–514, title XI, § 1121(a)(1), title XVIII, § 1852(a)(7)(B), (C), Oct. 22, 1986, 100 Stat. 2464, 2866; Pub. L. 117–328, div. T, title III, § 302(a), (b), Dec. 29, 2022, 136 Stat. 5339.)
- 1974Enacted · Pub. L. 93-406 · 88 Stat. 967
- 1976Amended · Pub. L. 94-455 · 90 Stat. 1834
- 1978Amended · Pub. L. 95-600 · 92 Stat. 2808
- 1986Amended · Pub. L. 99-514 · 100 Stat. 2464, 2866
- 2022Amended · Pub. L. 117-328 · 136 Stat. 5339
A history note hasn’t been published yet. The record shows enactment by Pub. L. 93-406 on 1974-09-02.
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