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26 U.S.C. § 4972 — Tax on nondeductible contributions to qualified employer plans
Federal law — U.S. Code and appendices · legal_authorities
**(a) Tax imposed** 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).
**(b) Employer liable for tax** The tax imposed by this section shall be paid by the employer making the contributions.
**(c) Nondeductible contributions** For purposes of this section—
(1) **In general** — The term “nondeductible contributions” means, with respect to any qualified employer plan, the sum of—
(A) the excess (if any) of—
(i) the amount contributed for the taxable year by the employer to or under such plan, over
(ii) the amount allowable as a deduction under section 404 for such contributions (determined without regard to subsection (e) thereof), and
(B) the amount determined under this subsection for the preceding taxable year reduced by the sum of—
(i) the portion of the amount so determined returned to the employer during the taxable year, and
(ii) the portion of the amount so determined deductible under section 404 for the taxable year (determined without regard to subsection (e) thereof).
(2) **Ordering rule for section 404** — For purposes of paragraph (1), the amount allowable as a deduction under section 404 for any taxable year shall be treated as—
(A) first from carryforwards to such taxable year from preceding taxable years (in order of time), and
(B) then from contributions made during such taxable year.
(3) **Contributions which may be returned to employer** — 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 s
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Source file: Laws/federal/codes/united-states-code/title-26/section-4972-tax-on-nondeductible-contributions-to-qualified-employer-plans--d2dced72c7.md
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Source location: Title 26, Chapter 43, § 4972; chapter-043-qualified-pension-etc-plans.md
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**(a) Tax imposed** 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).
**(b) Employer liable for tax** The tax imposed by this section shall be paid by the employer making the contributions.
**(c) Nondeductible contributions** For purposes of this section—
(1) **In general** — The term “nondeductible contributions” means, with respect to any qualified employer plan, the sum of—
(A) the excess (if any) of—
(i) the amount contributed for the taxable year by the employer to or under such plan, over
(ii) the amount allowable as a deduction under section 404 for such contributions (determined without regard to subsection (e) thereof), and
(B) the amount determined under this subsection for the preceding taxable year reduced by the sum of—
(i) the portion of the amount so determined returned to the employer during the taxable year, and
(ii) the portion of the amount so determined deductible under section 404 for the taxable year (determined without regard to subsection (e) thereof).
(2) **Ordering rule for section 404** — For purposes of paragraph (1), the amount allowable as a deduction under section 404 for any taxable year shall be treated as—
(A) first from carryforwards to such taxable year from preceding taxable years (in order of time), and
(B) then from contributions made during such taxable year.
(3) **Contributions which may be returned to employer** — 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).
(4) **Special rule for self-employed individuals** — For purposes of paragraph (1), if—
(A) the amount which is required to be contributed to a plan under section 412 on behalf of an individual who is an employee (within the meaning of section 401(c)(1)), exceeds
(B) the earned income (within the meaning of section 404(a)(8)) of such individual derived from the trade or business with respect to which such plan is established,
such excess shall be treated as an amount allowable as a deduction under section 404.
(5) **Pre-1987 contributions** — The term “nondeductible contribution” shall not include any contribution made for a taxable year beginning before January 1, 1987.
(6) **Exceptions** — In determining the amount of nondeductible contributions for any taxable year, there shall not be taken into account—
(A) 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 amount of contributions described in section 401(m)(4)(A), or
(B) so much of the contributions to a simple retirement account (within the meaning of section 408(p)), a simple plan (within the meaning of section 401(k)(11)), or a simplified employee pension (within the meaning of section 408(k)) which are not deductible when contributed solely because such contributions are not made in connection with a trade or business of the employer.
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)).11 See References in Text note below.
(7) **Defined benefit plan exception** — 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.
**(d) Definitions** For purposes of this section—
(1) **Qualified employer plan**
(A) *In general* — The term “qualified employer plan” means—
(i) any plan meeting the requirements of section 401(a) which includes a trust exempt from tax under section 501(a),
(ii) an annuity plan described in section 403(a),
(iii) any simplified employee pension (within the meaning of section 408(k)), and
(iv) any simple retirement account (within the meaning of section 408(p)).
(B) *Exemption for governmental and tax exempt plans* — The term “qualified employer plan” does not include a plan described in subparagraph (A) or (B) of section 4980(c)(1).
(2) **Employer** — 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).
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Married individuals filing joint returns and surviving spouses** There is hereby imposed on the taxable income of—
(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and
(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $36,90015% of taxable income. Over $36,900 but not over $89,150$5,535, plus 28% of the excess over $36,900. Over $89,150 but not over $140,000$20,165, plus 31% of the excess over $89,150. Over $140,000 but not over $250,000$35,928.50, plus 36% of the excess over $140,000. Over $250,000$75,528.50, plus 39.6% of the excess over $250,000.
**(b) Heads of households** There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $29,60015% of taxable income. Over $29,600 but not over $76,400$4,440, plus 28% of the excess over $29,600. Over $76,400 but not over $127,500$17,544, plus 31% of the excess over $76,400. Over $127,500 but not over $250,000$33,385, plus 36% of the excess over $127,500. Over $250,000$77,485, plus 39.6% of the excess over $250,000.
**(c) Unmarried individuals (other than surviving spouses and heads of households)** There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $22,10015% of taxable income. Over $22,100 but not over $53,50
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rules for annuities**
(1) **Income inclusion** — Except as otherwise provided in this chapter, gross income includes any amount received as an annuity (whether for a period certain or during one or more lives) under an annuity, endowment, or life insurance contract.
(2) **Partial annuitization** — If any amount is received as an annuity for a period of 10 years or more or during one or more lives under any portion of an annuity, endowment, or life insurance contract—
(A) such portion shall be treated as a separate contract for purposes of this section,
(B) for purposes of applying subsections (b), (c), and (e), the investment in the contract shall be allocated pro rata between each portion of the contract from which amounts are received as an annuity and the portion of the contract from which amounts are not received as an annuity, and
(C) a separate annuity starting date under subsection (c)(4) shall be determined with respect to each portion of the contract from which amounts are received as an annuity.
**(b) Exclusion ratio**
(1) **In general** — Gross income does not include that part of any amount received as an annuity under an annuity, endowment, or life insurance contract which bears the same ratio to such amount as the investment in the contract (as of the annuity starting date) bears to the expected return under the contract (as of such date).
(2) **Exclusion limited to investment** — The portion of any amount received as an annuity which is excluded from gross income under paragraph (1) shall not exceed the unrecovered investment in the contract immediately before the receipt of such amount.
(3) **Deduction where annuity payments cease before entire investment recovered**
(A) *In general* — If—
(i) after the annuity starti
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 72
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** If contributions are paid by an employer to or under a stock bonus, pension, profit-sharing, or annuity plan, or if compensation is paid or accrued on account of any employee under a plan deferring the receipt of such compensation, such contributions or compensation shall not be deductible under this chapter; but, if they would otherwise be deductible, they shall be deductible under this section, subject, however, to the following limitations as to the amounts deductible in any year:
(1) **Pension trusts**
(A) *In general* — In the taxable year when paid, if the contributions are paid into a pension trust (other than a trust to which paragraph (3) applies), and if such taxable year ends within or with a taxable year of the trust for which the trust is exempt under section 501(a), in the case of a defined benefit plan other than a multiemployer plan, in an amount determined under subsection (o), and in the case of any other plan in an amount determined as follows:
(i) the amount necessary to satisfy the minimum funding standard provided by section 412(a) for plan years ending within or with such taxable year (or for any prior plan year), if such amount is greater than the amount determined under clause (ii) or (iii) (whichever is applicable with respect to the plan),
(ii) the amount necessary to provide with respect to all of the employees under the trust the remaining unfunded cost of their past and current service credits distributed as a level amount, or a level percentage of compensation, over the remaining future service of each such employee, as determined under regulations prescribed by the Secretary, but if such remaining unfunded cost with respect to any 3 individuals is more than 50 percent of such remaining unfunded cost, the
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Requirements for qualification** A trust created or organized in the United States and forming part of a stock bonus, pension, or profit-sharing plan of an employer for the exclusive benefit of his employees or their beneficiaries shall constitute a qualified trust under this section—
(1) if contributions are made to the trust by such employer, or employees, or both, or by another employer who is entitled to deduct his contributions under section 404(a)(3)(B) (relating to deduction for contributions to profit-sharing and stock bonus plans), or by a charitable remainder trust pursuant to a qualified gratuitous transfer (as defined in section 664(g)(1)), for the purpose of distributing to such employees or their beneficiaries the corpus and income of the fund accumulated by the trust in accordance with such plan;
(2) if under the trust instrument it is impossible, at any time prior to the satisfaction of all liabilities with respect to employees and their beneficiaries under the trust, for any part of the corpus or income to be (within the taxable year or thereafter) used for, or diverted to, purposes other than for the exclusive benefit of his employees or their beneficiaries (but this paragraph shall not be construed, in the case of a multiemployer plan, to prohibit the return of a contribution within 6 months after the plan administrator determines that the contribution was made by a mistake of fact or law (other than a mistake relating to whether the plan is described in section 401(a) or the trust which is part of such plan is exempt from taxation under section 501(a), or the return of any withdrawal liability payment determined to be an overpayment within 6 months of such determination));
(3) if the plan of which such trust is a part satisfies the requireme
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 401
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Federal law — U.S. Code and appendices · legal_authorities
**(a)** For purposes of this subchapter, the term—
(1) “administrator” means the person or persons described in paragraph (16) of [section 1002 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title29-section1002&num=0&edition=prelim);
(2) “substantial employer”, for any plan year of a single-employer plan, means one or more persons—
(A) who are contributing sponsors of the plan in such plan year,
(B) who, at any time during such plan year, are members of the same controlled group, and
(C) whose required contributions to the plan for each plan year constituting one of—
(i) the two immediately preceding plan years, or
(ii) the first two of the three immediately preceding plan years,
total an amount greater than or equal to 10 percent of all contributions required to be paid to or under the plan for such plan year;
(3) “multiemployer plan” means a plan—
(A) to which more than one employer is required to contribute,
(B) which is maintained pursuant to one or more collective bargaining agreements between one or more employee organizations and more than one employer, and
(C) which satisfies such other requirements as the Secretary of Labor may prescribe by regulation,
except that, in applying this paragraph—
(i) a plan shall be considered a multiemployer plan on and after its termination date if the plan was a multiemployer plan under this paragraph for the plan year preceding such termination, and
(ii) for any plan year which began before September 26, 1980, the term “multiemployer plan” means a plan described in [section 414(f) of title 26](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section414/f&num=0&edition=prelim) as in effect immediately before such date;
(4) “corporation”,
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** A trust shall not constitute a qualified trust under section 401(a) for any plan year if the plan of which it is a part is a top-heavy plan for such plan year unless such plan meets—
(1) the vesting requirements of subsection (b), and
(2) the minimum benefit requirements of subsection (c).
**(b) Vesting requirements**
(1) **In general** — A plan satisfies the requirements of this subsection if it satisfies the requirements of either of the following subparagraphs:
(A) *3-year vesting* — A plan satisfies the requirements of this subparagraph if an employee who has completed at least 3 years of service with the employer or employers maintaining the plan has a nonforfeitable right to 100 percent of his accrued benefit derived from employer contributions.
(B) *6-year graded vesting* — A plan satisfies the requirements of this subparagraph if an employee has a nonforfeitable right to a percentage of his accrued benefit derived from employer contributions determined under the following table: Years of serviceThe nonforfeitable percentage is: 220 340 460 580 6 or more100
(2) **Certain rules made applicable** — Except to the extent inconsistent with the provisions of this subsection, the rules of section 411 shall apply for purposes of this subsection.
**(c) Plan must provide minimum benefits**
(1) **Defined benefit plans**
(A) *In general* — A defined benefit plan meets the requirements of this subsection if the accrued benefit derived from employer contributions of each participant who is a non-key employee, when expressed as an annual retirement benefit, is not less than the applicable percentage of the participant’s average compensation for years in the testing period.
(B) *Applicable percentage* — For purposes of subparagraph (A), th
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Federal law — U.S. Code and appendices · legal_authorities
Page 3060
TITLE 26—INTERNAL REVENUE CODE
§ 4972
ment relates, except as otherwise provided, see section
112 of Pub. L. 110–458, set out as a note under section 72
of this title.
EFFECTIVE DATE OF 2006 AMENDMENT
Amendment by section 114(e)(1)–(4) 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 212(b) of Pub. L. 109–280 appli-
cable with respect to taxable years beginning after 2007,
but only with respect to plan years beginning after 2007
which end with or within such taxable year, with spe-
cial rules for certain notices and certain restored bene-
fits, see section 212(e) of Pub. L. 109–280, set out as a
note under section 412 of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Pub. L. 104–188, title I, § 1464(b), Aug. 20, 1996, 110 Stat.
1825, provided that: ‘‘The amendment made by this sec-
tion [amending this section] shall take effect as if in-
cluded in the amendment made by clause (ii) of section
751(a)(9)(B) of the Retirement Protection Act of 1994
[Pub. L. 103–465] (108 Stat. 5020).’’
EFFECTIVE DATE OF 1994 AMENDMENT
Amendment by Pub. L. 103–465 applicable to plan
years beginning after Dec. 31, 1994, see section 751(b)(1)
of Pub. L. 103–465, set out as a note under section 401 of
this title.
EFFECTIVE DATE OF 1987 AMENDMENT
Pub. L. 100–203, title IX, § 9304(c)(2), Dec. 22, 1987, 101
Stat. 1330–348, provided that: ‘‘The amendments made
by this subsection [amending this section] shall apply
to plan years beginning after 1988.’’
Amendment by section 9305(a) of Pub. L. 100–203 ap-
p
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 4972
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