26 U.S.C. § 4979 — Tax on certain excess contributions
submitted 40 years ago by Pub. L. 99-514 to r/title-26-INTERNAL-REVENUE-CODE · 377 words · no verdicts yet
This section imposes a 10% tax on excess contributions and excess aggregate contributions to a covered plan. The employer pays, but timely distribution or forfeiture removes the tax.
(a) The tax is 10% of both kinds of excess for the plan year ending in the taxable year*. (b) The employer pays. (c)–(e) The terms and covered plans have the stated cross-referenced meanings. (f)(1) No tax applies to the extent the excess and allocable income are distributed or forfeited before the end of the first 2½ months of the next plan year, or six months for an eligible automatic contribution arrangement. (f)(2) The recipient earns and receives the distribution in the distribution year.
In the case of any plan, there is hereby imposed a tax for the taxable year* equal to 10 percent of the sum of—
any excess contributions under such plan for the plan year ending in such taxable year, and
any excess aggregate contributions under the plan for the plan year ending in such taxable year.
The tax imposed by subsection (a) shall be paid by the employer.
For purposes of this section, the term “excess contributions” has the meaning given such term by sections 401(k)(8)(B), 408(k)(6)(C), and 501(c)(18).
For purposes of this section, the term “excess aggregate contribution” has the meaning given to such term by section 401(m)(6)(B). For purposes of determining excess aggregate contributions under an annuity contract described in section 403(b), such contract shall be treated as a plan described in subsection (e)(1).
For purposes of this section, the term “plan” means—
a plan described in section 401(a) which includes a trust exempt from tax under section 501(a),
any annuity plan described in section 403(a),
any annuity contract described in section 403(b),
a simplified employee pension* of an employer which satisfies the requirements of section 408(k), and
a plan described in section 501(c)(18).
Such term includes any plan which, at any time, has been determined by the Secretary* to be such a plan.
No tax shall be imposed under this section on any excess contribution or excess aggregate contribution, as the case may be, to the extent such contribution (together with any income allocable thereto through the end of the plan year for which the contribution was made) is distributed (or, if forfeitable, is forfeited) before the close of the first 2½ months (6 months in the case of an excess contribution or excess aggregate contribution to an eligible automatic contribution arrangement (as defined in section 414(w)(3))) of the following plan year.
Any amount distributed as provided in paragraph (1) shall be treated as earned and received by the recipient in the recipient’s taxable year in which such distributions were made.
Source credit: (Added Pub. L. 99–514, title XI, § 1117(b)(1), Oct. 22, 1986, 100 Stat. 2461; amended Pub. L. 100–647, title I, § 1011(l)(8)–(11), Nov. 10, 1988, 102 Stat. 3470, 3471; Pub. L. 109–280, title IX, § 902(e)(1)–(3)(A), Aug. 17, 2006, 120 Stat. 1038.)
- 1986Enacted · Pub. L. 99-514 · 100 Stat. 2461
- 1988Amended · Pub. L. 100-647 · 102 Stat. 3470, 3471
- 2006Amended · Pub. L. 109-280 · 120 Stat. 1038
A history note hasn’t been published yet. The record shows enactment by Pub. L. 99-514 on 1986-10-22.
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