26 U.S.C. § 4972
In the case of any qualified employer plan, there is hereby imposed a tax equal to 10 percent of the nondeductible contributions under the plan (determined as of the close of the taxable year of the employer).
The tax imposed by this section shall be paid by the employer making the contributions.
For purposes of this section-
The term "nondeductible contributions" means, with respect to any qualified employer plan, the sum of-
For purposes of paragraph (1), the amount allowable as a deduction under section 404 for any taxable year shall be treated as-
In determining the amount of nondeductible contributions for any taxable year, there shall not be taken into account any contribution for such taxable year which is distributed to the employer in a distribution described in section 4980(c)(2)(B)(ii) if such distribution is made on or before the last day on which a contribution may be made for such taxable year under section 404(a)(6).
For purposes of paragraph (1), if-
such excess shall be treated as an amount allowable as a deduction under section 404.
The term "nondeductible contribution" shall not include any contribution made for a taxable year beginning before January 1, 1987.
In determining the amount of nondeductible contributions for any taxable year, there shall not be taken into account-
For purposes of subparagraph (A), the deductible limits under section 404(a)(7) shall first be applied to amounts contributed to a defined benefit plan and then to amounts described in subparagraph (A). Subparagraph (B) shall not apply to contributions made on behalf of the employer or a member of the employer's family (as defined in section 447(e)(1)).1
In determining the amount of nondeductible contributions for any taxable year, an employer may elect for such year not to take into account any contributions to a defined benefit plan except, in the case of a multiemployer plan, to the extent that such contributions exceed the full-funding limitation (as defined in section 431(c)(6)). For purposes of this paragraph, the deductible limits under section 404(a)(7) shall first be applied to amounts contributed to defined contribution plans and then to amounts described in this paragraph. If an employer makes an election under this paragraph for a taxable year, paragraph (6) shall not apply to such employer for such taxable year.
For purposes of this section-
The term "qualified employer plan" means-
The term "qualified employer plan" does not include a plan described in subparagraph (A) or (B) of section 4980(c)(1).
In the case of a plan which provides contributions or benefits for employees some or all of whom are self-employed individuals within the meaning of section 401(c)(1), the term "employer" means the person treated as the employer under section 401(c)(4).
1 See References in Text note below.
26 U.S.C. § 4972
EDITORIAL NOTES
REFERENCES IN TEXTSection 447(e), referred to in subsec. (c)(6), was repealed and provisions were redesignated as section 447(e) which do not relate to members of the employer's family by Pub. L. 115-97, §13102(a)(5)(C), Dec. 22, 2017, 131 Stat. 2103.
PRIOR PROVISIONSA prior section, added Pub. L. 93-406, title II, §2001(f)(1), Sept. 2, 1974, 88 Stat. 955; amended Pub. L. 94-455, title XIX, §1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97-34, title III, §312(e)(3), Aug. 13, 1981, 95 Stat. 285; Pub. L. 97-448, title I, §103(c)(10)(B), Jan. 12, 1983, 96 Stat. 2377; Pub. L. 98-369, div. A, title IV, §491(d)(40), July 18, 1984, 98 Stat. 851, related to tax on excess contributions for self-employed individuals, prior to repeal applicable to years beginning after Dec. 31, 1983, by Pub. L. 97-248, title II, §237(c)(1), Sept. 3, 1982, 96 Stat. 511.
AMENDMENTS2022-Subsec. (c)(6)(B). Pub. L. 117-328 substituted "408(p))," for "408(p)) or" and inserted ", or a simplified employee pension (within the meaning of section 408(k))" after "401(k)(11))". 2006-Subsec. (c)(6)(A). Pub. L. 109-280, §803(c), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: "so much of the contributions to 1 or more defined contribution plans which are not deductible when contributed solely because of section 404(a)(7) as does not exceed the greater of-"(i) the amount of contributions not in excess of 6 percent of compensation (within the meaning of section 404(a) and as adjusted under section 404(a)(12)) paid or accrued (during the taxable year for which the contributions were made) to beneficiaries under the plans, or"(ii) the amount of contributions described in section 401(m)(4)(A), or".Subsec. (c)(7). Pub. L. 109-280, §114(e)(5), substituted "except, in the case of a multiemployer plan, to the extent that such contributions exceed the full-funding limitation (as defined in section 431(c)(6))" for "except to the extent that such contributions exceed the full-funding limitation (as defined in section 412(c)(7), determined without regard to subparagraph (A)(i)(I) thereof)".2004-Subsec. (c)(6). Pub. L. 108-311, §408(b)(9), amended directory language of Pub. L. 107-16, §652(b)(3) . See 2001 Amendment note below.Subsec. (c)(6)(A)(ii). Pub. L. 108-311, §404(c), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: "the sum of-"(I) the amount of contributions described in section 401(m)(4)(A), plus"(II) the amount of contributions described in section 402(g)(3)(A), or". 2001-Subsec. (c)(6). Pub. L. 107-16, §652(b)(4), substituted "Subparagraph (B)" for "Subparagraph (C)" in concluding provisions. Pub. L. 107-16, §652(b)(3), as amended by Pub. L. 108-311, §408(b)(9), substituted "subparagraph (A)" for "subparagraph (B)" in two places in concluding provisions. Pub. L. 107-16, §652(b)(2), in concluding provisions, struck out first sentence which read as follows: "If 1 or more defined benefit plans were taken into account in determining the amount allowable as a deduction under section 404 for contributions to any defined contribution plan, subparagraph (B) shall apply only if such defined benefit plans are described in section 404(a)(1)(D)." Pub. L. 107-16, §637(b), in concluding provisions, inserted at end "Subparagraph (C) shall not apply to contributions made on behalf of the employer or a member of the employer's family (as defined in section 447(e)(1))."Subsec. (c)(6)(A). Pub. L. 107-16, §652(b)(1), redesignated subpar. (B) as (A) and struck out former subpar. (A) which read as follows: "contributions that would be deductible under section 404(a)(1)(D) if the plan had more than 100 participants if- "(i) the plan is covered under section 4021 of the Employee Retirement Income Security Act of 1974, and"(ii) the plan is terminated under section 4041(b) of such Act on or before the last day of the taxable year,". Pub. L. 107-16, §637(a), struck out "and" at end.Subsec. (c)(6)(B). Pub. L. 107-16, §652(b)(1), redesignated subpar. (C) as (B). Former subpar. (B) redesignated (A). Pub. L. 107-16, §637(a), substituted ", or" for period at end.Subsec. (c)(6)(B)(i). Pub. L. 107-16, §616(b)(2)(B), substituted "(within the meaning of section 404(a) and as adjusted under section 404(a)(12))" for "(within the meaning of section 404(a))".Subsec. (c)(6)(C). Pub. L. 107-16, §652(b)(1), redesignated subpar. (C) as (B). Pub. L. 107-16, §637(a), added subpar. (C).Subsec. (c)(7). Pub. L. 107-16, §653(a), added par. (7). 1997-Subsec. (c)(6)(B). Pub. L. 105-34 amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: "contributions to 1 or more defined contribution plans which are not deductible when contributed solely because of section 404(a)(7), but only to the extent such contributions do not exceed 6 percent of compensation (within the meaning of section 404(a)) paid or accrued (during the taxable year for which the contributions were made) to beneficiaries under the plans." 1996-Subsec. (d)(1)(A)(iv). Pub. L. 104-188 added cl. (iv).1994-Subsec. (c)(6). Pub. L. 103-465 added par. (6).1988-Subsec. (c). Pub. L. 100-647, §1011A(e)(1), amended subsec. (c) generally, revising and restating as pars. (1) to (4) provisions of former pars. (1) and (2). Subsec. (c)(4), (5). Pub. L. 100-647, §2005(a)(1), added par. (4) and redesignated former par. (4) as (5).Subsec. (d)(1). Pub. L. 100-647, §1011A(e)(2), amended par. (1) generally. Prior to amendment, par. (1) read as follows: "The term 'qualified employer plan' means- "(A) any plan meeting the requirements of section 401(a) which includes a trust exempt from the tax under section 501(a), "(B) an annuity plan described in section 403(a), and "(C) any simplified employee pension (within the meaning of section 408(k))."
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2022 AMENDMENT Pub. L. 117-328, div. T, title I, §118(b), Dec. 29, 2022, 136 Stat. 5302, provided that:"(1) IN GENERAL.-The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act [Dec. 29, 2022]."(2) NO INFERENCE.-Nothing in the amendments made by this section shall be construed to infer the proper treatment under section 4972(c)(6) of the Internal Revenue Code of 1986 of nondeductible contributions to which the amendments made by this section [amending this section] do not apply."
EFFECTIVE DATE OF 2006 AMENDMENT Amendment by section 114(e)(5) of Pub. L. 109-280 applicable to taxable years beginning after 2007, but only with respect to plan years beginning after 2007 which end with or within any such taxable year, see section 114(g) of Pub. L. 109-280, as added by Pub. L. 110-458, set out as a note under section 401 of this title.Amendment by section 803(c) of Pub. L. 109-280 applicable to contributions for taxable years beginning after Dec. 31, 2005, see section 803(d) of Pub. L. 109-280, set out as a note under section 404 of this title.
EFFECTIVE DATE OF 2004 AMENDMENT Amendment by section 404(c) of Pub. L. 108-311 effective as if included in the provision of Pub. L. 107-16 to which such amendment relates, see section 404(f) of Pub. L. 108-311, set out as a note under section 45A of this title.
EFFECTIVE DATE OF 2001 AMENDMENT Amendment by section 616(b)(2)(B) of Pub. L. 107-16 applicable to years beginning after Dec. 31, 2001, see section 616(c) of Pub. L. 107-16, set out as a note under section 404 of this title. Pub. L. 107-16, §637(d), June 7, 2001, 115 Stat. 118, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2001."Amendment by section 652(b) of Pub. L. 107-16 applicable to plan years beginning after Dec. 31, 2001, see section 652(c) of Pub. L. 107-16, set out as a note under section 404 of this title. Pub. L. 107-16, §653(b), June 7, 2001, 115 Stat. 130, provided that: "The amendment made by this section [amending this section] shall apply to years beginning after December 31, 2001."
EFFECTIVE DATE OF 1997 AMENDMENT Pub. L. 105-34, §1507(b), Aug. 5, 1997, 111 Stat. 1067, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 1997."
EFFECTIVE DATE OF 1996 AMENDMENT Amendment by Pub. L. 104-188 applicable to taxable years beginning after Dec. 31, 1996, see section 1421(e) of Pub. L. 104-188, set out as a note under section 72 of this title.
EFFECTIVE DATE OF 1994 AMENDMENT Pub. L. 103-465, §755(b), Dec. 8, 1994, 108 Stat. 5024, provided that:"(1) SECTION 4972(C)(6)(A).-Section 4972(c)(6)(A) of the Internal Revenue Code of 1986 (as added by this section) shall apply to taxable years ending on or after the date of enactment of this Act [Dec. 8, 1994]."(2) SECTION 4972(C)(6)(B).-Section 4972(c)(6)(B) of such Code (as added by this section) shall apply to taxable years ending on or after December 31, 1992."
EFFECTIVE DATE OF 1988 AMENDMENT Amendment by section 1011A(e)(1), (2) of Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.Amendment by section 2005(a)(1) of Pub. L. 100-647 effective as if included in the amendment made by section 1131(c) of Pub. L. 99-514, see section 2005(e) of Pub. L. 100-647, as amended, set out as a note under section 404 of this title.
EFFECTIVE DATESection applicable to taxable years beginning after Dec. 31, 1986, with special rules in case of plans maintained pursuant to collective bargaining agreements, see section 1131(d) of Pub. L. 99-514, as amended, set out as an Effective Date of 1986 Amendment note under section 404 of this title.
CONSTRUCTION OF 2001 AMENDMENT Pub. L. 107-16, §637(c), June 7, 2001, 115 Stat. 118, provided that: "Nothing in the amendments made by this section [amending this section] shall be construed to infer the proper treatment of nondeductible contributions under the laws in effect before such amendments."
APPLICABILITY OF AMENDMENTS BY SUBTITLES A AND B OF title I of Pub. L. 109-280 For special rules on applicability of amendments by subtitles A (§§101-108) and B (§§111-116) of title I of Pub. L. 109-280 to certain eligible cooperative plans, PBGC settlement plans, and eligible government contractor plans, see sections 104, 105, and 106 of Pub. L. 109-280, set out as notes under section 401 of this title.
INCREASE IN AMOUNT FOR PLAN TERMINATION INSURANCE UNDER EMPLOYEE RETIREMENT INSURANCE SECURITY ACT OF 1974Pub. L. 100-647, title I, §1011A(e)(5), Nov. 10, 1988, 102 Stat. 3478, provided that: "In the case of any taxable year beginning in 1987, the amount under section 4972(c)(1)(A)(ii) of the 1986 Code for a plan to which title IV of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1301 et seq.] applies shall be increased by the amount (if any) by which, as of the close of the plan year with or within which such taxable year begins-"(A) the liabilities of such plan (determined as if the plan had terminated as of such time), exceed"(B) the assets of such plan."
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1998For provisions directing that if any amendments made by subtitle D [§§1401-1465] of title I of Pub. L. 104-188 require an amendment to any plan or annuity contract, such amendment shall not be required to be made before the first day of the first plan year beginning on or after Jan. 1, 1998, see section 1465 of Pub. L. 104-188, set out as a note under section 401 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101-1147 and 1171-1177] or title XVIII [§§1800-1899A] 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, as amended, set out as a note under section 401 of this title.
- Internal Revenue Code of 1986
- The term "Internal Revenue Code of 1986" means this title, and the term "Internal Revenue Code of 1939" means the Internal Revenue Code enacted February 10, 1939, as amended.
- person
- The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
- taxable year
- The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
- trade or business
- The term "trade or business" includes the performance of the functions of a public office.