I.R.C. § 4974(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 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.
I.R.C. § 4974(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.
I.R.C. § 4974(c) Qualified Retirement Plan —
For purposes of this section, the term “qualified retirement
plan” means—
I.R.C. § 4974(c)(1) —
a plan described in section 401(a) which includes a trust
exempt from tax under section 501(a),
I.R.C. § 4974(c)(2) —
an annuity plan described in section 403(a),
I.R.C. § 4974(c)(3) —
an annuity contract described in
section 403(b),
I.R.C. § 4974(c)(4) —
an individual retirement account
described in section 408(a),
or
I.R.C. § 4974(c)(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.
I.R.C. § 4974(d) Waiver Of Tax In Certain Cases —
If the taxpayer establishes to the satisfaction of
the Secretary that—
I.R.C. § 4974(d)(1) —
the shortfall described in subsection
(a) in the amount distributed during any taxable year was due to
reasonable error, and
I.R.C. § 4974(d)(2) —
reasonable steps are being taken
to remedy the shortfall, the Secretary may waive the tax imposed
by subsection (a) for the taxable year.
I.R.C. § 4974(e) Reduction of Tax in Certain Cases —
I.R.C. § 4974(e)(1) Reduction —
In the case of a taxpayer who—
I.R.C. § 4974(e)(1)(A) —
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
I.R.C. § 4974(e)(1)(B) —
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’.
I.R.C. § 4974(e)(2) Correction Window —
For purposes of this subsection, the term ‘correction
window’ means 20 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—
I.R.C. § 4974(e)(2)(A) —
the date of mailing a notice of deficiency
with respect to the tax imposed by subsection (a) under section 6212,
I.R.C. § 4974(e)(2)(B) —
the date on which the tax imposed by
subsection (a) is assessed, or
I.R.C. § 4974(e)(2)(C) —
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.
(Added Pub.
L. 93-406, title II, 2002(e), Sept. 2, 1974, 88 Stat. 967,
and 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, Sec. 302(a), (b), Dec. 29, 2022.)
BACKGROUND NOTES
AMENDMENTS
2022 —
Subsec. (a). Pub. L. 117-328,
Div. T, Sec. 302(a), amended par. (a) by substituting “25 percent”
for “50 percent”.
Subsec. (e). Pub. L. 117-328, Div. T, Sec. 302(b), added
new 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”.
EFFECTIVE
DATE OF 2022 AMENDMENT
Amendment by Pub. L. 117-328, Sec. 302(a), (b) applicable
to taxable years beginning after the date of enactment of this Act
[enacted: Dec. 29, 2022].
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 1121(a)(1) of Pub. L. 99-514 applicable to years beginning
after Dec. 31, 1988, with special provisions for plans maintained
pursuant to collective bargaining agreements ratified before Mar.
1, 1986, 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
Section 157(i)(2) of Pub.
L. 95-600 provided that: “The amendment made by paragraph
(1) [amending this section] shall apply to taxable years beginning
after December 31, 1975.”
EFFECTIVE DATE
Section effective Jan. 1, 1975, 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 section 1121(a)(1) 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 Jan. 1,
1989, see section 1140 of Pub. L. 99-514,
set out as a note under section 401 of this title.
