§4974 — Excise tax on certain accumulations in qualified retirement plans
5 cases·5 cited
Statute Text — 26 U.S.C. §4974
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.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §54.4974-1 Excise tax on accumulations in qualified retirement plans
- Treas. Reg. §Treas. Reg. §54.4974-1(a) Imposition of excise tax—(1) In general.
- Treas. Reg. §Treas. Reg. §54.4974-1(b) Definition of qualified retirement plan.
- Treas. Reg. §Treas. Reg. §54.4974-1(c) Determination of required minimum distribution for individual accounts—(1) General rule.
- Treas. Reg. §Treas. Reg. §54.4974-1(d) Determination of required minimum distribution under a defined benefit plan or annuity—(1) General rule.
- Treas. Reg. §Treas. Reg. §54.4974-1(e) Distribution of remaining benefit after deadline for required distribution.
- Treas. Reg. §Treas. Reg. §54.4974-1(f) Excise tax for first distribution calendar year.
- Treas. Reg. §Treas. Reg. §54.4974-1(g) Waiver of excise tax—(1) General rule.
- Treas. Reg. §Treas. Reg. §54.4974-1(h) Applicability date.
- Treas. Reg. §Treas. Reg. §54.4974-1(i) A distribution is required to be made to an individual under § 1.
5 Citing Cases
tributions from his qualified retirement plans. Petitioners timely filed their petition with this Court for 2003 and 2005 on May 4, 2009. 3The parties do not dispute that Dr. Isaacs' distributions were from "qualified retirement plans" as defined by sec. 4974 (c). OPINION I. Burden of Proof Respondent's determinations in the notices of deficiency are presumed correct, and petitioners would ordinarily bear the burden of proving that respondent's determinations are incorrect. See Rule 142(a) (1).
(1) Imposition of additional tax.--If any taxpayer receives any amount from a qualified retirement plan (as defined in section 4974 (c)), the taxpayer's tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of such amount which is includible in gross income.
tributions from his qualified retirement plans. Petitioners timely filed their petition with this Court for 2003 and 2005 on May 4, 2009. 3The parties do not dispute that Dr. Isaacs' distributions were from "qualified retirement plans" as defined by sec. 4974 (c). OPINION I. Burden of Proof Respondent's determinations in the notices of deficiency are presumed correct, and petitioners would ordinarily bear the burden of proving that respondent's determinations are incorrect. See Rule 142(a) (1).
Section 4974(cy describes the various types of-retirement accounts and plans whose distributions are subject to the additional-'10 - . percent tax of: section 72(t)(1), including individual retirement accounts (IRAs) described in section 408(a) and (b) and , . .pertinent here, qualified retirement plans described in .section 401(a) and (.k), . Cong
s distributions under section 4980A(a). See Emmons v. Commissioner, T.C. Memo. 1996-265; Powell v. Commissioner, T.C. Memo. 1996-264; Montgomery v. Commissioner, T.C. Memo. 1996-263; see also O'Connor v. Commissioner, T.C. Memo. 1994-170 (regarding section 4974). B. Petitioner's Contention Notwithstanding the foregoing, petitioner argues that she is not liable for the excise tax under section 4980A(a) because the Transfer Refund was not paid to her on account of her retirement but rather as an i