26 U.S.C. § 408 — Individual retirement accounts

Page 1306 TITLE 26—INTERNAL REVENUE CODE § 408 the provision of the Technical and Miscellaneous Rev- enue Act of 1988, Pub. L. 100–647, to which such amend- ment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title. Amendment by section 7831(f) of Pub. L. 101–239 effec- tive as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 7831(g) of Pub. L. 101–239, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1988 AMENDMENT Amendment by 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. EFFECTIVE DATE OF 1986 AMENDMENT Amendment by section 1112(d)(3) of Pub. L. 99–514 ap- plicable to plan years beginning after Dec. 31, 1988, with special rule regarding collective bargaining agreements ratified before Mar. 1, 1986, and with provision for waiv- er of excise tax on reversions, see section 1112(e) of Pub. L. 99–514, set out as a note under section 401 of this title. Amendment by section 1114(b)(9)(B), (C) of Pub. L. 99–514 applicable to years beginning after Dec. 31, 1988, see section 1114(c)(3) of Pub. L. 99–514, set out as a note under section 414 of this title. Amendment by section 1852(e)(2)(D) of Pub. L. 99–514 applicable to transfers after Oct. 22, 1986, see section 1852(e)(2)(E) of Pub. L. 99–514, set out as a note under section 406 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–369 applicable to obliga- tions issued after Dec. 31, 1983, see section 491(f)(1) of Pub. L. 98–369, set out as a note under section 62 of this title. EFFECTIVE DATE OF 1983 AMENDMENT Amendment by Pub. L. 98–21 applicable to plans es- tablished after Apr. 20, 1983, except that at the election of any domestic parent corporation such amendment shall also apply to any plan established on or before Apr. 20, 1983, see section 321(f) of Pub. L. 98–21 set out as a note under section 406 of this title. EFFECTIVE DATE OF 1974 AMENDMENT Amendment by section 1016(a)(5) of Pub. L. 93–406 ap- plicable, except as otherwise provided in section 1017(c) through (i) of Pub. L. 93–406, for plan years beginning after Sept. 2, 1974, but, in the case of plans in existence on Jan. 1, 1974, amendment by Pub. L. 93–406 applicable for plan years beginning after Dec. 31, 1975, see section 1017 of Pub. L. 93–406, set out as an Effective Date; Transitional Rules note under section 410 of this title. Amendment by section 2005(c)(13) of Pub. L. 93–406 ap- plicable only with respect to distributions or payments made after Dec. 31, 1973, in taxable years beginning after Dec. 31, 1973, see section 2005(d) of Pub. L. 93–406, set out as a note under section 402 of this title. EFFECTIVE DATE OF 1969 AMENDMENT Amendment by Pub. L. 91–172 applicable to taxable years ending after Dec. 31, 1969, see section 515(d) of Pub. L. 91–172, set out as a note under section 402 of this title. EFFECTIVE DATE Section applicable to taxable years ending after Dec. 31, 1963, see section 220(d) of Pub. L. 88–272, set out as a note under section 406 of this title. REGULATIONS Secretary of the Treasury or his delegate to issue be- fore Feb. 1, 1988, final regulations to carry out amend- ments made by sections 1112 and 1114 of Pub. L. 99–514, see section 1141 of Pub. L. 99–514, set out as a note under section 401 of this title. PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1998 For 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 begin- ning 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, 1994 For provisions directing that if any amendments made by subtitle B [§§ 521–523] of title V of Pub. L. 102–318 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, 1994, see section 523 of Pub. L. 102–318, set out as a note under section 401 of this title. PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989 For 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. § 408. Individual retirement accounts (a) Individual retirement account For purposes of this section, the term ‘‘indi- vidual retirement account’’ means a trust cre- ated or organized in the United States for the exclusive benefit of an individual or his bene- ficiaries, but only if the written governing in- strument creating the trust meets the following requirements: (1) Except in the case of a rollover contribu- tion described in subsection (d)(3) or in section 402(c), 403(a)(4), 403(b)(8), or 457(e)(16), no con- tribution will be accepted unless it is in cash, and contributions will not be accepted for the taxable year on behalf of any individual in ex- cess of the amount in effect for such taxable year under section 219(b)(1)(A). (2) The trustee is a bank (as defined in sub- section (n)) or such other person who dem- onstrates to the satisfaction of the Secretary that the manner in which such other person will administer the trust will be consistent with the requirements of this section. (3) No part of the trust funds will be invested in life insurance contracts. (4) The interest of an individual in the bal- ance in his account is nonforfeitable. (5) The assets of the trust will not be com- mingled with other property except in a com- mon trust fund or common investment fund. (6) Under regulations prescribed by the Sec- retary, rules similar to the rules of section 401(a)(9) and the incidental death benefit re- quirements of section 401(a) shall apply to the distribution of the entire interest of an indi- vidual for whose benefit the trust is main- tained. (b) Individual retirement annuity For purposes of this section, the term ‘‘indi- vidual retirement annuity’’ means an annuity Page 1307 TITLE 26—INTERNAL REVENUE CODE § 408 contract, or an endowment contract (as deter- mined under regulations prescribed by the Sec- retary), issued by an insurance company which meets the following requirements: (1) The contract is not transferable by the owner. (2) Under the contract— (A) the premiums are not fixed, (B) the annual premium on behalf of any individual will not exceed the dollar amount in effect under section 219(b)(1)(A), and (C) any refund of premiums will be applied before the close of the calendar year fol- lowing the year of the refund toward the payment of future premiums or the purchase of additional benefits. (3) Under regulations prescribed by the Sec- retary, rules similar to the rules of section 401(a)(9) and the incidental death benefit re- quirements of section 401(a) shall apply to the distribution of the entire interest of the owner. (4) The entire interest of the owner is non- forfeitable. Such term does not include such an annuity con- tract for any taxable year of the owner in which it is disqualified on the application of subsection (e) or for any subsequent taxable year. For pur- poses of this subsection, no contract shall be treated as an endowment contract if it matures later than the taxable year in which the indi- vidual in whose name such contract is purchased attains the applicable age (determined under section 401(a)(9)(C)(v) for the calendar year in which such taxable year begins); if it is not for the exclusive benefit of the individual in whose name it is purchased or his beneficiaries; or if the aggregate annual premiums under all such contracts purchased in the name of such indi- vidual for any taxable year exceed the dollar amount in effect under section 219(b)(1)(A). (c) Accounts established by employers and cer- tain associations of employees A trust created or organized in the United States by an employer for the exclusive benefit of his employees or their beneficiaries, or by an association of employees (which may include employees within the meaning of section 401(c)(1)) for the exclusive benefit of its members or their beneficiaries, shall be treated as an in- dividual retirement account (described in sub- section (a)), but only if the written governing instrument creating the trust meets the fol- lowing requirements: (1) The trust satisfies the requirements of paragraphs (1) through (6) of subsection (a). (2) There is a separate accounting for the in- terest of each employee or member (or spouse of an employee or member). (3) There is a separate accounting for any in- terest of an employee or member (or spouse of an employee or member) in a Roth IRA. The assets of the trust may be held in a common fund for the account of all individuals who have an interest in the trust. (d) Tax treatment of distributions (1) In general Except as otherwise provided in this sub- section, any amount paid or distributed out of an individual retirement plan shall be in- cluded in gross income by the payee or dis- tributee, as the case may be, in the manner provided under section 72. (2) Special rules for applying section 72 For purposes of applying section 72 to any amount described in paragraph (1)— (A) all individual retirement plans shall be treated as 1 contract, (B) all distributions during any taxable year shall be treated as 1 distribution, and (C) the value of the contract, income on the contract, and investment in the contract shall be computed as of the close of the cal- endar year in which the taxable year begins. For purposes of subparagraph (C), the value of the contract shall be increased by the amount of any distributions during the calendar year. (3) Rollover contribution An amount is described in this paragraph as a rollover contribution if it meets the require- ments of subparagraphs (A) and (B). (A) In general Paragraph (1) does not apply to any amount paid or distributed out of an indi- vidual retirement account or individual re- tirement annuity to the individual for whose benefit the account or annuity is maintained if— (i) the entire amount received (including money and any other property) is paid into an individual retirement account or indi- vidual retirement annuity (other than an endowment contract) for the benefit of such individual not later than the 60th day after the day on which he receives the pay- ment or distribution; or (ii) the entire amount received (includ- ing money and any other property) is paid into an eligible retirement plan for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received, except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross income (determined without regard to this paragraph). For purposes of clause (ii), the term ‘‘eligi- ble retirement plan’’ means an eligible re- tirement plan described in clause (iii), (iv), (v), or (vi) of section 402(c)(8)(B). (B) Limitation This paragraph does not apply to any amount described in subparagraph (A)(i) re- ceived by an individual from an individual retirement account or individual retirement annuity if at any time during the 1-year pe- riod ending on the day of such receipt such individual received any other amount de- scribed in that subparagraph from an indi- vidual retirement account or an individual retirement annuity which was not includible in his gross income because of the applica- tion of this paragraph. Page 1308 TITLE 26—INTERNAL REVENUE CODE § 408 (C) Denial of rollover treatment for inherited accounts, etc. (i) In general In the case of an inherited individual re- tirement account or individual retirement annuity— (I) this paragraph shall not apply to any amount received by an individual from such an account or annuity (and no amount transferred from such account or annuity to another individual retirement account or annuity shall be excluded from gross income by reason of such transfer), and (II) such inherited account or annuity shall not be treated as an individual re- tirement account or annuity for pur- poses of determining whether any other amount is a rollover contribution. (ii) Inherited individual retirement ac- count or annuity An individual retirement account or in- dividual retirement annuity shall be treat- ed as inherited if— (I) the individual for whose benefit the account or annuity is maintained ac- quired such account by reason of the death of another individual, and (II) such individual was not the sur- viving spouse of such other individual. (D) Partial rollovers permitted (i) In general If any amount paid or distributed out of an individual retirement account or indi- vidual retirement annuity would meet the requirements of subparagraph (A) but for the fact that the entire amount was not paid into an eligible plan as required by clause (i) or (ii) of subparagraph (A), such amount shall be treated as meeting the re- quirements of subparagraph (A) to the ex- tent it is paid into an eligible plan referred to in such clause not later than the 60th day referred to in such clause. (ii) Eligible plan For purposes of clause (i), the term ‘‘eli- gible plan’’ means any account, annuity, contract, or plan referred to in subpara- graph (A). (E) Denial of rollover treatment for required distributions This paragraph shall not apply to any amount to the extent such amount is re- quired to be distributed under subsection (a)(6) or (b)(3). (F) Frozen deposits For purposes of this paragraph, rules simi- lar to the rules of section 402(c)(7) (relating to frozen deposits) shall apply. (G) Simple retirement accounts In the case of any payment or distribution out of a simple retirement account (as de- fined in subsection (p)) to which section 72(t)(6)(A) applies, this paragraph shall not apply unless such payment or distribution is paid into another simple retirement ac- count. (H) Application of section 72 (i) In general If— (I) a distribution is made from an indi- vidual retirement plan, and (II) a rollover contribution is made to an eligible retirement plan described in section 402(c)(8)(B)(iii), (iv), (v), or (vi) with respect to all or part of such dis- tribution, then, notwithstanding paragraph (2), the rules of clause (ii) shall apply for purposes of applying section 72. (ii) Applicable rules In the case of a distribution described in clause (i)— (I) section 72 shall be applied sepa- rately to such distribution, (II) notwithstanding the pro rata allo- cation of income on, and investment in, the contract to distributions under sec- tion 72, the portion of such distribution rolled over to an eligible retirement plan described in clause (i) shall be treated as from income on the contract (to the ex- tent of the aggregate income on the con- tract from all individual retirement plans of the distributee), and (III) appropriate adjustments shall be made in applying section 72 to other dis- tributions in such taxable year and sub- sequent taxable years. (I) Waiver of 60-day requirement The Secretary may waive the 60-day re- quirement under subparagraphs (A) and (D) where the failure to waive such requirement would be against equity or good conscience, including casualty, disaster, or other events beyond the reasonable control of the indi- vidual subject to such requirement. (4) Contributions returned before due date of return Paragraph (1) does not apply to the distribu- tion of any contribution paid during a taxable year to an individual retirement account or for an individual retirement annuity if— (A) such distribution is received on or be- fore the day prescribed by law (including ex- tensions of time) for filing such individual’s return for such taxable year, (B) no deduction is allowed under section 219 with respect to such contribution, and (C) such distribution is accompanied by the amount of net income attributable to such contribution. In the case of such a distribution, for purposes of section 61, any net income described in sub- paragraph (C) shall be deemed to have been earned and receivable in the taxable year in which such contribution is made. (5) Distributions of excess contributions after due date for taxable year and certain ex- cess rollover contributions (A) In general In the case of any individual, if the aggre- gate contributions (other than rollover con- Page 1309 TITLE 26—INTERNAL REVENUE CODE § 408 tributions) paid for any taxable year to an individual retirement account or for an indi- vidual retirement annuity do not exceed the dollar amount in effect under section 219(b)(1)(A), paragraph (1) shall not apply to the distribution of any such contribution to the extent that such contribution exceeds the amount allowable as a deduction under section 219 for the taxable year for which the contribution was paid— (i) if such distribution is received after the date described in paragraph (4), (ii) but only to the extent that no deduc- tion has been allowed under section 219 with respect to such excess contribution. If employer contributions on behalf of the individual are paid for the taxable year to a simplified employee pension, the dollar limi- tation of the preceding sentence shall be in- creased by the lesser of the amount of such contributions or the dollar limitation in ef- fect under section 415(c)(1)(A) for such tax- able year. (B) Excess rollover contributions attrib- utable to erroneous information If— (i) the taxpayer reasonably relies on in- formation supplied pursuant to subtitle F for determining the amount of a rollover contribution, but (ii) the information was erroneous, subparagraph (A) shall be applied by increas- ing the dollar limit set forth therein by that portion of the excess contribution which was attributable to such information. For purposes of this paragraph, the amount al- lowable as a deduction under section 219 shall be computed without regard to section 219(g). (6) Transfer of account incident to divorce The transfer of an individual’s interest in an individual retirement account or an individual retirement annuity to his spouse or former spouse under a divorce or separation instru- ment described in clause (i) of section 121(d)(3)(C) is not to be considered a taxable transfer made by such individual notwith- standing any other provision of this subtitle, and such interest at the time of the transfer is to be treated as an individual retirement ac- count of such spouse, and not of such indi- vidual. Thereafter such account or annuity for purposes of this subtitle is to be treated as maintained for the benefit of such spouse. (7) Special rules for simplified employee pen- sions or simple retirement accounts (A) Transfer or rollover of contributions pro- hibited until deferral test met Notwithstanding any other provision of this subsection or section 72(t), paragraph (1) and section 72(t)(1) shall apply to the trans- fer or distribution from a simplified em- ployee pension of any contribution under a salary reduction arrangement described in subsection (k)(6) (or any income allocable thereto) before a determination as to wheth- er the requirements of subsection (k)(6)(A)(iii) are met with respect to such contribution. (B) Certain exclusions treated as deductions For purposes of paragraphs (4) and (5) and section 4973, any amount excludable or ex- cluded from gross income under section 402(h) or 402(k) shall be treated as an amount allowable or allowed as a deduction under section 219. (8) Distributions for charitable purposes (A) In general So much of the aggregate amount of quali- fied charitable distributions with respect to a taxpayer made during any taxable year which does not exceed $100,000 shall not be includible in gross income of such taxpayer for such taxable year. The amount of dis- tributions not includible in gross income by reason of the preceding sentence for a tax- able year (determined without regard to this sentence) shall be reduced (but not below zero) by an amount equal to the excess of— (i) the aggregate amount of deductions allowed to the taxpayer under section 219 for all taxable years ending on or after the date the taxpayer attains age 701⁄2, over (ii) the aggregate amount of reductions under this sentence for all taxable years preceding the current taxable year. (B) Qualified charitable distribution For purposes of this paragraph, the term ‘‘qualified charitable distribution’’ means any distribution from an individual retire- ment plan (other than a plan described in subsection (k) or (p))— (i) which is made directly by the trustee to an organization described in section 170(b)(1)(A) (other than any organization described in section 509(a)(3) or any fund or account described in section 4966(d)(2)), and (ii) which is made on or after the date that the individual for whose benefit the plan is maintained has attained age 701⁄2. A distribution shall be treated as a qualified charitable distribution only to the extent that the distribution would be includible in gross income without regard to subpara- graph (A). (C) Contributions must be otherwise deduct- ible For purposes of this paragraph, a distribu- tion to an organization described in subpara- graph (B)(i) shall be treated as a qualified charitable distribution only if a deduction for the entire distribution would be allow- able under section 170 (determined without regard to subsection (b) thereof and this paragraph). (D) Application of section 72 Notwithstanding section 72, in deter- mining the extent to which a distribution is a qualified charitable distribution, the en- tire amount of the distribution shall be treated as includible in gross income with- out regard to subparagraph (A) to the extent that such amount does not exceed the aggre- gate amount which would have been so in- cludible if all amounts in all individual re- Page 1310 TITLE 26—INTERNAL REVENUE CODE § 408 tirement plans of the individual were dis- tributed during such taxable year and all such plans were treated as 1 contract for purposes of determining under section 72 the aggregate amount which would have been so includible. Proper adjustments shall be made in applying section 72 to other dis- tributions in such taxable year and subse- quent taxable years. (E) Denial of deduction Qualified charitable distributions which are not includible in gross income pursuant to subparagraph (A) shall not be taken into account in determining the deduction under section 170. (F) One-time election for qualified charitable distribution to split-interest entity (i) In general A taxpayer may for a taxable year elect under this subparagraph to treat as meet- ing the requirement of subparagraph (B)(i) any distribution from an individual retire- ment account which is made directly by the trustee to a split-interest entity, but only if— (I) an election is not in effect under this subparagraph for a preceding tax- able year, (II) the aggregate amount of distribu- tions of the taxpayer with respect to which an election under this subpara- graph is made does not exceed $50,000, and (III) such distribution meets the re- quirements of clauses (iii) and (iv). (ii) Split-interest entity For purposes of this subparagraph, the term ‘‘split-interest entity’’ means— (I) a charitable remainder annuity trust (as defined in section 664(d)(1)), but only if such trust is funded exclusively by qualified charitable distributions, (II) a charitable remainder unitrust (as defined in section 664(d)(2)), but only if such unitrust is funded exclusively by qualified charitable distributions, or (III) a charitable gift annuity (as de- fined in section 501(m)(5)), but only if such annuity is funded exclusively by qualified charitable distributions and commences fixed payments of 5 percent or greater not later than 1 year from the date of funding. (iii) Contributions must be otherwise de- ductible A distribution meets the requirements of this clause only if— (I) in the case of a distribution to a charitable remainder annuity trust or a charitable remainder unitrust, a deduc- tion for the entire value of the remain- der interest in the distribution for the benefit of a specified charitable organi- zation would be allowable under section 170 (determined without regard to sub- section (b) thereof and this paragraph), and (II) in the case of a charitable gift an- nuity, a deduction in an amount equal to the amount of the distribution reduced by the value of the annuity described in section 501(m)(5)(B) would be allowable under section 170 (determined without regard to subsection (b) thereof and this paragraph). (iv) Limitation on income interests A distribution meets the requirements of this clause only if— (I) no person holds an income interest in the split-interest entity other than the individual for whose benefit such ac- count is maintained, the spouse of such individual, or both, and (II) the income interest in the split-in- terest entity is nonassignable. (v) Special rules (I) Charitable remainder trusts Notwithstanding section 664(b), dis- tributions made from a trust described in subclause (I) or (II) of clause (ii) shall be treated as ordinary income in the hands of the beneficiary to whom the an- nuity described in section 664(d)(1)(A) or the payment described in section 664(d)(2)(A) is paid. (II) Charitable gift annuities Qualified charitable distributions made to fund a charitable gift annuity shall not be treated as an investment in the contract for purposes of section 72(c). (G) Inflation adjustment (i) In general In the case of any taxable year beginning after 2023, each of the dollar amounts in subparagraphs (A) and (F) shall be in- creased by an amount equal to— (I) such dollar amount, multiplied by (II) the cost-of-living adjustment de- termined under section 1(f)(3) for the cal- endar year in which the taxable year be- gins, determined by substituting ‘‘cal- endar year 2022’’ for ‘‘calendar year 2016’’ in subparagraph (A)(ii) thereof. (ii) Rounding If any dollar amount increased under clause (i) is not a multiple of $1,000, such dollar amount shall be rounded to the nearest multiple of $1,000. (9) Distribution for health savings account funding (A) In general In the case of an individual who is an eligi- ble individual (as defined in section 223(c)) and who elects the application of this para- graph for a taxable year, gross income of the individual for the taxable year does not in- clude a qualified HSA funding distribution to the extent such distribution is otherwise includible in gross income. (B) Qualified HSA funding distribution For purposes of this paragraph, the term ‘‘qualified HSA funding distribution’’ means a distribution from an individual retirement plan (other than a plan described in sub- Page 1311 TITLE 26—INTERNAL REVENUE CODE § 408 section (k) or (p)) of the employee to the ex- tent that such distribution is contributed to the health savings account of the individual in a direct trustee-to-trustee transfer. (C) Limitations (i) Maximum dollar limitation The amount excluded from gross income by subparagraph (A) shall not exceed the excess of— (I) the annual limitation under section 223(b) computed on the basis of the type of coverage under the high deductible health plan covering the individual at the time of the qualified HSA funding distribution, over (II) in the case of a distribution de- scribed in clause (ii)(II), the amount of the earlier qualified HSA funding dis- tribution. (ii) One-time transfer (I) In general Except as provided in subclause (II), an individual may make an election under subparagraph (A) only for one qualified HSA funding distribution during the life- time of the individual. Such an election, once made, shall be irrevocable. (II) Conversion from self-only to family coverage If a qualified HSA funding distribution is made during a month in a taxable year during which an individual has self-only coverage under a high deductible health plan as of the first day of the month, the individual may elect to make an addi- tional qualified HSA funding distribu- tion during a subsequent month in such taxable year during which the individual has family coverage under a high deduct- ible health plan as of the first day of the subsequent month. (D) Failure to maintain high deductible health plan coverage (i) In general If, at any time during the testing period, the individual is not an eligible individual, then the aggregate amount of all contribu- tions to the health savings account of the individual made under subparagraph (A)— (I) shall be includible in the gross in- come of the individual for the taxable year in which occurs the first month in the testing period for which such indi- vidual is not an eligible individual, and (II) the tax imposed by this chapter for any taxable year on the individual shall be increased by 10 percent of the amount which is so includible. (ii) Exception for disability or death Subclauses (I) and (II) of clause (i) shall not apply if the individual ceased to be an eligible individual by reason of the death of the individual or the individual becom- ing disabled (within the meaning of sec- tion 72(m)(7)). (iii) Testing period The term ‘‘testing period’’ means the pe- riod beginning with the month in which the qualified HSA funding distribution is contributed to a health savings account and ending on the last day of the 12th month following such month. (E) Application of section 72 Notwithstanding section 72, in deter- mining the extent to which an amount is treated as otherwise includible in gross in- come for purposes of subparagraph (A), the aggregate amount distributed from an indi- vidual retirement plan shall be treated as in- cludible in gross income to the extent that such amount does not exceed the aggregate amount which would have been so includible if all amounts from all individual retirement plans were distributed. Proper adjustments shall be made in applying section 72 to other distributions in such taxable year and subse- quent taxable years. (e) Tax treatment of accounts and annuities (1) Exemption from tax Any individual retirement account is ex- empt from taxation under this subtitle unless such account has ceased to be an individual re- tirement account by reason of paragraph (2) or (3). Notwithstanding the preceding sentence, any such account is subject to the taxes im- posed by section 511 (relating to imposition of tax on unrelated business income of chari- table, etc. organizations). (2) Loss of exemption of account where em- ployee engages in prohibited transaction (A) In general If, during any taxable year of the indi- vidual for whose benefit any individual re- tirement account is established, that indi- vidual or his beneficiary engages in any transaction prohibited by section 4975 with respect to such account, such account ceases to be an individual retirement account as of the first day of such taxable year. For pur- poses of this paragraph— (i) the individual for whose benefit any account was established is treated as the creator of such account, (ii) the separate account for any indi- vidual within an individual retirement ac- count maintained by an employer or asso- ciation of employees is treated as a sepa- rate individual retirement account, and (iii) each individual retirement plan of the individual shall be treated as a sepa- rate contract. (B) Account treated as distributing all its as- sets In any case in which any account ceases to be an individual retirement account by rea- son of subparagraph (A) as of the first day of any taxable year, paragraph (1) of subsection (d) applies as if there were a distribution on such first day in an amount equal to the fair market value (on such first day) of all assets in the account (on such first day). (3) Effect of borrowing on annuity contract If during any taxable year the owner of an individual retirement annuity borrows any money under or by use of such contract, the Page 1312 TITLE 26—INTERNAL REVENUE CODE § 408 contract ceases to be an individual retirement annuity as of the first day of such taxable year. Such owner shall include in gross income for such year an amount equal to the fair mar- ket value of such contract as of such first day. (4) Effect of pledging account as security If, during any taxable year of the individual for whose benefit an individual retirement ac- count is established, that individual uses the account or any portion thereof as security for a loan, the portion so used is treated as dis- tributed to that individual. (5) Purchase of endowment contract by indi- vidual retirement account If the assets of an individual retirement ac- count or any part of such assets are used to purchase an endowment contract for the ben- efit of the individual for whose benefit the ac- count is established— (A) to the extent that the amount of the assets involved in the purchase are not at- tributable to the purchase of life insurance, the purchase is treated as a rollover con- tribution described in subsection (d)(3), and (B) to the extent that the amount of the assets involved in the purchase are attrib- utable to the purchase of life, health, acci- dent, or other insurance, such amounts are treated as distributed to that individual (but the provisions of subsection (f) do not apply). (6) Commingling individual retirement account amounts in certain common trust funds and common investment funds Any common trust fund or common invest- ment fund of individual retirement account assets which is exempt from taxation under this subtitle does not cease to be exempt on account of the participation or inclusion of as- sets of a trust exempt from taxation under section 501(a) which is described in section 401(a). [(f) Repealed. Pub. L. 99–514, title XI, § 1123(d)(2), Oct. 22, 1986, 100 Stat. 2475] (g) Community property laws This section shall be applied without regard to any community property laws. (h) Custodial accounts For purposes of this section, a custodial ac- count shall be treated as a trust if the assets of such account are held by a bank (as defined in subsection (n)) or another person who dem- onstrates, to the satisfaction of the Secretary, that the manner in which he will administer the account will be consistent with the require- ments of this section, and if the custodial ac- count would, except for the fact that it is not a trust, constitute an individual retirement ac- count described in subsection (a). For purposes of this title, in the case of a custodial account treated as a trust by reason of the preceding sentence, the custodian of such account shall be treated as the trustee thereof. (i) Reports The trustee of an individual retirement ac- count and the issuer of an endowment contract described in subsection (b) or an individual re- tirement annuity shall make such reports re- garding such account, contract, or annuity to the Secretary and to the individuals for whom the account, contract, or annuity is, or is to be, maintained with respect to contributions (and the years to which they relate), distributions ag- gregating $10 or more in any calendar year, and such other matters as the Secretary may re- quire. The reports required by this subsection— (1) shall be filed at such time and in such manner as the Secretary prescribes, and (2) shall be furnished to individuals— (A) not later than January 31 of the cal- endar year following the calendar year to which such reports relate, and (B) in such manner as the Secretary pre- scribes. In the case of a simple retirement account under subsection (p), only one report under this sub- section shall be required to be submitted each calendar year to the Secretary (at the time pro- vided under paragraph (2)) but, in addition to the report under this subsection, there shall be furnished, within 31 days after each calendar year, to the individual on whose behalf the ac- count is maintained a statement with respect to the account balance as of the close of, and the account activity during, such calendar year. (j) Increase in maximum limitations for sim- plified employee pensions In the case of any simplified employee pen- sion, subsections (a)(1) and (b)(2) of this section shall be applied by increasing the amounts con- tained therein by the amount of the limitation in effect under section 415(c)(1)(A). (k) Simplified employee pension defined (1) In general For purposes of this title, the term ‘‘sim- plified employee pension’’ means an individual retirement account or individual retirement annuity— (A) with respect to which the requirements of paragraphs (2), (3), (4), and (5) of this sub- section are met, and (B) if such account or annuity is part of a top-heavy plan (as defined in section 416), with respect to which the requirements of section 416(c)(2) are met. (2) Participation requirements This paragraph is satisfied with respect to a simplified employee pension for a year only if for such year the employer contributes to the simplified employee pension of each employee who— (A) has attained age 21, (B) has performed service for the employer during at least 3 of the immediately pre- ceding 5 years, and (C) received at least $450 in compensation (within the meaning of section 414(q)(4)) from the employer for the year. For purposes of this paragraph, there shall be excluded from consideration employees de- scribed in subparagraph (A) or (C) of section 410(b)(3). For purposes of any arrangement de- scribed in subsection (k)(6), any employee who is eligible to have employer contributions Page 1313 TITLE 26—INTERNAL REVENUE CODE § 408 made on the employee’s behalf under such ar- rangement shall be treated as if such a con- tribution was made. (3) Contributions may not discriminate in favor of the highly compensated, etc. (A) In general The requirements of this paragraph are met with respect to a simplified employee pension for a year if for such year the con- tributions made by the employer to sim- plified employee pensions for his employees do not discriminate in favor of any highly compensated employee (within the meaning of section 414(q)). (B) Special rules For purposes of subparagraph (A), there shall be excluded from consideration em- ployees described in subparagraph (A) or (C) of section 410(b)(3). (C) Contributions must bear uniform rela- tionship to total compensation For purposes of subparagraph (A), and ex- cept as provided in subparagraph (D), em- ployer contributions to simplified employee pensions (other than contributions under an arrangement described in paragraph (6)) shall be considered discriminatory unless contributions thereto bear a uniform rela- tionship to the compensation (not in excess of the first $200,000) of each employee main- taining a simplified employee pension. (D) Permitted disparity For purposes of subparagraph (C), the rules of section 401(l)(2) shall apply to contribu- tions to simplified employee pensions (other than contributions under an arrangement described in paragraph (6)). (4) Withdrawals must be permitted A simplified employee pension meets the re- quirements of this paragraph only if— (A) employer contributions thereto are not conditioned on the retention in such pension of any portion of the amount contributed, and (B) there is no prohibition imposed by the employer on withdrawals from the simplified employee pension. (5) Contributions must be made under written allocation formula The requirements of this paragraph are met with respect to a simplified employee pension only if employer contributions to such pension are determined under a definite written allo- cation formula which specifies— (A) the requirements which an employee must satisfy to share in an allocation, and (B) the manner in which the amount allo- cated is computed. (6) Employee may elect salary reduction ar- rangement (A) Arrangements which qualify (i) In general A simplified employee pension shall not fail to meet the requirements of this sub- section for a year merely because, under the terms of the pension, an employee may elect to have the employer make pay- ments— (I) as elective employer contributions to the simplified employee pension on behalf of the employee, or (II) to the employee directly in cash. (ii) 50 percent of eligible employees must elect Clause (i) shall not apply to a simplified employee pension unless an election de- scribed in clause (i)(I) is made or is in ef- fect with respect to not less than 50 per- cent of the employees of the employer eli- gible to participate. (iii) Requirements relating to deferral per- centage Clause (i) shall not apply to a simplified employee pension for any year unless the deferral percentage for such year of each highly compensated employee eligible to participate is not more than the product of— (I) the average of the deferral percent- ages for such year of all employees (other than highly compensated employ- ees) eligible to participate, multiplied by (II) 1.25. (iv) Limitations on elective deferrals Clause (i) shall not apply to a simplified employee pension unless the requirements of section 401(a)(30) are met. (B) Exception where more than 25 employees This paragraph shall not apply with re- spect to any year in the case of a simplified employee pension maintained by an em- ployer with more than 25 employees who were eligible to participate (or would have been required to be eligible to participate if a pension was maintained) at any time dur- ing the preceding year. (C) Distributions of excess contributions (i) In general Rules similar to the rules of section 401(k)(8) shall apply to any excess con- tribution under this paragraph. Any excess contribution under a simplified employee pension shall be treated as an excess con- tribution for purposes of section 4979. (ii) Excess contribution For purposes of clause (i), the term ‘‘ex- cess contribution’’ means, with respect to a highly compensated employee, the excess of elective employer contributions under this paragraph over the maximum amount of such contributions allowable under sub- paragraph (A)(iii). (D) Deferral percentage For purposes of this paragraph, the defer- ral percentage for an employee for a year shall be the ratio of— (i) the amount of elective employer con- tributions actually paid over to the sim- plified employee pension on behalf of the employee for the year, to (ii) the employee’s compensation (not in excess of the first $200,000) for the year. Page 1314 TITLE 26—INTERNAL REVENUE CODE § 408 (E) Exception for State and local and tax-ex- empt pensions This paragraph shall not apply to a sim- plified employee pension maintained by— (i) a State or local government or polit- ical subdivision thereof, or any agency or instrumentality thereof, or (ii) an organization exempt from tax under this title. (F) Exception where pension does not meet requirements necessary to insure dis- tribution of excess contributions This paragraph shall not apply with re- spect to any year for which the simplified employee pension does not meet such re- quirements as the Secretary may prescribe as are necessary to insure that excess con- tributions are distributed in accordance with subparagraph (C), including— (i) reporting requirements, and (ii) requirements which, notwithstanding paragraph (4), provide that contributions (and any income allocable thereto) may not be withdrawn from a simplified em- ployee pension until a determination has been made that the requirements of sub- paragraph (A)(iii) have been met with re- spect to such contributions. (G) Highly compensated employee For purposes of this paragraph, the term ‘‘highly compensated employee’’ has the meaning given such term by section 414(q). (H) Termination This paragraph shall not apply to years be- ginning after December 31, 1996. The pre- ceding sentence shall not apply to a sim- plified employee pension of an employer if the terms of simplified employee pensions of such employer, as in effect on December 31, 1996, provide that an employee may make the election described in subparagraph (A). (7) Roth contribution election An individual retirement plan which is des- ignated as a Roth IRA shall not be treated as a simplified employee pension under this sub- section unless the employee elects for such plan to be so treated (at such time and in such manner as the Secretary may provide). (8) Definitions For purposes of this subsection and sub- section (l)— (A) Employee, employer, or owner-employee The terms ‘‘employee’’, ‘‘employer’’, and ‘‘owner-employee’’ shall have the respective meanings given such terms by section 401(c). (B) Compensation Except as provided in paragraph (2)(C), the term ‘‘compensation’’ has the meaning given such term by section 414(s). (C) Year The term ‘‘year’’ means— (i) the calendar year, or (ii) if the employer elects, subject to such terms and conditions as the Sec- retary may prescribe, to maintain the sim- plified employee pension on the basis of the employer’s taxable year. (9) Cost-of-living adjustment The Secretary shall adjust the $450 amount in paragraph (2)(C) at the same time and in the same manner as under section 415(d) and shall adjust the $200,000 amount in paragraphs (3)(C) and (6)(D)(ii) at the same time, and by the same amount, as any adjustment under section 401(a)(17)(B); except that any increase in the $450 amount which is not a multiple of $50 shall be rounded to the next lowest mul- tiple of $50. (10) Cross reference For excise tax on certain excess contributions, see section 4979. (l) Simplified employer reports (1) In general An employer who makes a contribution on behalf of an employee to a simplified employee pension shall provide such simplified reports with respect to such contributions as the Sec- retary may require by regulations. The reports required by this subsection shall be filed at such time and in such manner, and informa- tion with respect to such contributions shall be furnished to the employee at such time and in such manner, as may be required by regula- tions. (2) Simple retirement accounts (A) No employer reports Except as provided in this paragraph, no report shall be required under this section by an employer maintaining a qualified sal- ary reduction arrangement under subsection (p). (B) Summary description The trustee of any simple retirement ac- count established pursuant to a qualified salary reduction arrangement under sub- section (p) and the issuer of an annuity es- tablished under such an arrangement shall provide to the employer maintaining the ar- rangement, each year a description con- taining the following information: (i) The name and address of the employer and the trustee or issuer. (ii) The requirements for eligibility for participation. (iii) The benefits provided with respect to the arrangement. (iv) The time and method of making elections with respect to the arrangement. (v) The procedures for, and effects of, withdrawals (including rollovers) from the arrangement. (C) Employee notification The employer shall notify each employee immediately before the period for which an election described in subsection (p)(5)(C) may be made of the employee’s opportunity to make such election. Such notice shall in- clude a copy of the description described in subparagraph (B). Page 1315 TITLE 26—INTERNAL REVENUE CODE § 408 1 So in original. Concluding provisions probably should be part of subpar. (B). (m) Investment in collectibles treated as dis- tributions (1) In general The acquisition by an individual retirement account or by an individually-directed account under a plan described in section 401(a) of any collectible shall be treated (for purposes of this section and section 402) as a distribution from such account in an amount equal to the cost to such account of such collectible. (2) Collectible defined For purposes of this subsection, the term ‘‘collectible’’ means— (A) any work of art, (B) any rug or antique, (C) any metal or gem, (D) any stamp or coin, (E) any alcoholic beverage, or (F) any other tangible personal property specified by the Secretary for purposes of this subsection. (3) Exception for certain coins and bullion For purposes of this subsection, the term ‘‘collectible’’ shall not include— (A) any coin which is— (i) a gold coin described in paragraph (7), (8), (9), or (10) of section 5112(a) of title 31, United States Code, (ii) a silver coin described in section 5112(e) of title 31, United States Code, (iii) a platinum coin described in section 5112(k) of title 31, United States Code, or (iv) a coin issued under the laws of any State, or (B) any gold, silver, platinum, or palla- dium bullion of a fineness equal to or ex- ceeding the minimum fineness that a con- tract market (as described in section 5 of the Commodity Exchange Act, 7 U.S.C. 7) re- quires for metals which may be delivered in satisfaction of a regulated futures contract, if such bullion is in the physical possession of a trustee described under subsection (a) of this section.1 (n) Bank For purposes of subsection (a)(2), the term ‘‘bank’’ means— (1) any bank (as defined in section 581), (2) an insured credit union (within the mean- ing of paragraph (6) or (7) of section 101 of the Federal Credit Union Act), and (3) a corporation which, under the laws of the State of its incorporation, is subject to su- pervision and examination by the Commis- sioner of Banking or other officer of such State in charge of the administration of the banking laws of such State. (o) Definitions and rules relating to nondeduct- ible contributions to individual retirement plans (1) In general Subject to the provisions of this subsection, designated nondeductible contributions may be made on behalf of an individual to an indi- vidual retirement plan. (2) Limits on amounts which may be contrib- uted (A) In general The amount of the designated nondeduct- ible contributions made on behalf of any in- dividual for any taxable year shall not ex- ceed the nondeductible limit for such tax- able year. (B) Nondeductible limit For purposes of this paragraph— (i) In general The term ‘‘nondeductible limit’’ means the excess of— (I) the amount allowable as a deduc- tion under section 219 (determined with- out regard to section 219(g)), over (II) the amount allowable as a deduc- tion under section 219 (determined with regard to section 219(g)). (ii) Taxpayer may elect to treat deductible contributions as nondeductible If a taxpayer elects not to deduct an amount which (without regard to this clause) is allowable as a deduction under section 219 for any taxable year, the non- deductible limit for such taxable year shall be increased by such amount. (C) Designated nondeductible contributions (i) In general For purposes of this paragraph, the term ‘‘designated nondeductible contribution’’ means any contribution to an individual retirement plan for the taxable year which is designated (in such manner as the Sec- retary may prescribe) as a contribution for which a deduction is not allowable under section 219. (ii) Designation Any designation under clause (i) shall be made on the return of tax imposed by chapter 1 for the taxable year. (3) Time when contributions made In determining for which taxable year a des- ignated nondeductible contribution is made, the rule of section 219(f)(3) shall apply. (4) Individual required to report amount of designated nondeductible contributions (A) In general Any individual who— (i) makes a designated nondeductible contribution to any individual retirement plan for any taxable year, or (ii) receives any amount from any indi- vidual retirement plan for any taxable year, shall include on his return of the tax im- posed by chapter 1 for such taxable year and any succeeding taxable year (or on such other form as the Secretary may prescribe for any such taxable year) information de- scribed in subparagraph (B). (B) Information required to be supplied The following information is described in this subparagraph: Page 1316 TITLE 26—INTERNAL REVENUE CODE § 408 (i) The amount of designated nondeduct- ible contributions for the taxable year. (ii) The amount of distributions from in- dividual retirement plans for the taxable year. (iii) The excess (if any) of— (I) the aggregate amount of designated nondeductible contributions for all pre- ceding taxable years, over (II) the aggregate amount of distribu- tions from individual retirement plans which was excludable from gross income for such taxable years. (iv) The aggregate balance of all indi- vidual retirement plans of the individual as of the close of the calendar year in which the taxable year begins. (v) Such other information as the Sec- retary may prescribe. (C) Penalty for reporting contributions not made For penalty where individual reports designated nondeductible contributions not made, see section 6693(b). (5) Special rule for difficulty of care payments excluded from gross income In the case of an individual who for a tax- able year excludes from gross income under section 131 a qualified foster care payment which is a difficulty of care payment, if— (A) the deductible amount in effect for the taxable year under section 219(b), exceeds (B) the amount of compensation includible in the individual’s gross income for the tax- able year, the individual may elect to increase the non- deductible limit under paragraph (2) for the taxable year by an amount equal to the lesser of such excess or the amount so excluded. (p) Simple retirement accounts (1) In general For purposes of this title, the term ‘‘simple retirement account’’ means an individual re- tirement plan (as defined in section 7701(a)(37))— (A) with respect to which the requirements of paragraphs (3), (4), and (5) are met; and (B) except in the case of a rollover con- tribution described in subsection (d)(3)(G) or a rollover contribution otherwise described in subsection (d)(3) or in section 402(c), 403(a)(4), 403(b)(8), or 457(e)(16), which is made after the 2-year period described in section 72(t)(6), with respect to which the only contributions allowed are contributions under a qualified salary reduction arrange- ment. (2) Qualified salary reduction arrangement (A) In general For purposes of this subsection, the term ‘‘qualified salary reduction arrangement’’ means a written arrangement of an eligible employer under which— (i) an employee eligible to participate in the arrangement may elect to have the employer make payments— (I) as elective employer contributions to a simple retirement account on behalf of the employee, or (II) to the employee directly in cash, (ii) the amount which an employee may elect under clause (i) for any year is re- quired to be expressed as a percentage of compensation and may not exceed a total of the applicable dollar amount for any year, (iii) the employer is required to make a matching contribution to the simple re- tirement account for any year in an amount equal to so much of the amount the employee elects under clause (i)(I) as does not exceed the applicable percentage of compensation for the year, (iv) the employer may make nonelective contributions of a uniform percentage (up to 10 percent) of compensation for each employee who is eligible to participate in the arrangement, and who has at least $5,000 of compensation from the employer for the year, but such contributions with respect to any employee shall not exceed $5,000 for the year, and (v) no contributions may be made other than contributions described in clause (i), (iii), or (iv). The compensation taken into account under clause (iv) for any year shall not exceed the limitation in effect for such year under sec- tion 401(a)(17). (B) Employer may elect 2-percent nonelective contribution (i) In general An employer shall be treated as meeting the requirements of subparagraph (A)(iii) for any year if, in lieu of the contributions described in such clause, the employer elects to make nonelective contributions of 2 percent of compensation for each em- ployee who is eligible to participate in the arrangement and who has at least $5,000 of compensation from the employer for the year. If an employer makes an election under this subparagraph for any year, the employer shall notify employees of such election within a reasonable period of time before the 60-day period for such year under paragraph (5)(C). (ii) Compensation limitation The compensation taken into account under clause (i) for any year shall not ex- ceed the limitation in effect for such year under section 401(a)(17). (iii) Special rule for electing larger employ- ers In the case of an employer which had more than 25 employees who received at least $5,000 of compensation from the em- ployer for the preceding year, and which makes the election under subparagraph (E)(i)(II) for any year, clause (i) shall be applied for such year by substituting ‘‘3 percent’’ for ‘‘2 percent’’. (C) Definitions For purposes of this subsection— (i) Eligible employer (I) In general The term ‘‘eligible employer’’ means, with respect to any year, an employer Page 1317 TITLE 26—INTERNAL REVENUE CODE § 408 which had no more than 100 employees who received at least $5,000 of compensa- tion from the employer for the preceding year. (II) 2-year grace period An eligible employer who establishes and maintains a plan under this sub- section for 1 or more years and who fails to be an eligible employer for any subse- quent year shall be treated as an eligible employer for the 2 years following the last year the employer was an eligible employer. If such failure is due to any acquisition, disposition, or similar trans- action involving an eligible employer, the preceding sentence shall not apply. (ii) Applicable percentage (I) In general Except as provided in subclause (IV), the term ‘‘applicable percentage’’ means 3 percent. (II) Election of lower percentage An employer may elect to apply a lower percentage (not less than 1 per- cent) for any year for all employees eli- gible to participate in the plan for such year if the employer notifies the employ- ees of such lower percentage within a reasonable period of time before the 60- day election period for such year under paragraph (5)(C). An employer may not elect a lower percentage under this sub- clause for any year if that election would result in the applicable percentage being lower than the applicable percentage in more than 2 of the years in the 5-year pe- riod ending with such year. (III) Special rule for years arrangement not in effect If any year in the 5-year period de- scribed in subclause (II) is a year prior to the first year for which any qualified sal- ary reduction arrangement is in effect with respect to the employer (or any predecessor), the employer shall be treated as if the level of the employer matching contribution was at the appli- cable percentage of compensation for such prior year. (IV) Special rule for electing larger em- ployers In the case of an employer which had more than 25 employees who received at least $5,000 of compensation from the employer for the preceding year, and which makes the election under subpara- graph (E)(i)(II) for any year, subclause (I) shall be applied for such year by sub- stituting ‘‘4 percent’’ for ‘‘3 percent’’. (D) Arrangement may be only plan of em- ployer (i) In general An arrangement shall not be treated as a qualified salary reduction arrangement for any year if the employer (or any prede- cessor employer) maintained a qualified plan with respect to which contributions were made, or benefits were accrued, for service in any year in the period beginning with the year such arrangement became effective and ending with the year for which the determination is being made. If only individuals other than employees de- scribed in subparagraph (A) of section 410(b)(3) are eligible to participate in such arrangement, then the preceding sentence shall be applied without regard to any qualified plan in which only employees so described are eligible to participate. (ii) Qualified plan For purposes of this subparagraph, the term ‘‘qualified plan’’ means a plan, con- tract, pension, or trust described in sub- paragraph (A) or (B) of section 219(g)(5). (E) Applicable dollar amount; cost-of-living adjustment (i) In general For purposes of subparagraph (A)(ii), the applicable dollar amount is— (I) the adjusted dollar amount in the case of an eligible employer described in clause (iii) which had not more than 25 employees who received at least $5,000 of compensation from the employer for the preceding year, (II) the adjusted dollar amount in the case of an eligible employer described in clause (iii) which is not described in sub- clause (I) and which elects, at such time and in such manner as prescribed by the Secretary, the application of this sub- clause for the year, and (III) $10,000 in any other case. (ii) Adjusted dollar amount For purposes of clause (i), the adjusted dollar amount is an amount equal to 110 percent of the dollar amount in effect under clause (i)(III) for calendar year 2024. (iii) Cost-of-living adjustment (I) Certain large employers In the case of a year beginning after December 31, 2005, the Secretary shall adjust the $10,000 amount under clause (i)(III) at the same time and in the same manner as under section 415(d), except that the base period taken into account shall be the calendar quarter beginning July 1, 2004, and any increase under this subparagraph which is not a multiple of $500 shall be rounded to the next lower multiple of $500. (II) Other employers In the case of a year beginning after December 31, 2024, the Secretary shall adjust annually the adjusted dollar amount under clause (ii) in the manner provided under subclause (I) of this clause, except that the base period taken into account shall be the calendar quar- ter beginning July 1, 2023. (iv) Employer has not had another plan within 3 years An eligible employer is described in this clause only if, during the 3-taxable-year Page 1318 TITLE 26—INTERNAL REVENUE CODE § 408 period immediately preceding the 1st year the employer maintains the qualified sal- ary reduction arrangement under this paragraph, neither the employer nor any member of any controlled group including the employer (or any predecessor of either) established or maintained any plan de- scribed in clause (i), (ii), or (iv) of section 219(g)(5)(A) with respect to which contribu- tions were made, or benefits were accrued, for substantially the same employees as are eligible to participate in such qualified salary reduction arrangement. (F) Matching contributions for qualified stu- dent loan payments (i) In general Subject to the rules of clause (iii), an ar- rangement shall not fail to be treated as meeting the requirements of subparagraph (A)(iii) solely because under the arrange- ment, solely for purposes of such subpara- graph, qualified student loan payments are treated as amounts elected by the em- ployee under subparagraph (A)(i)(I) to the extent such payments do not exceed— (I) the applicable dollar amount under subparagraph (E) (after application of section 414(v)) for the year (or, if lesser, the employee’s compensation (as defined in section 415(c)(3)) for the year), reduced by (II) any other amounts elected by the employee under subparagraph (A)(i)(I) for the year. (ii) Qualified student loan payment For purposes of this subparagraph— (I) In general The term ‘‘qualified student loan pay- ment’’ means a payment made by an em- ployee in repayment of a qualified edu- cation loan (as defined in section 221(d)(1)) incurred by the employee to pay qualified higher education expenses, but only if the employee certifies to the employer making the matching con- tribution that such payment has been made on such a loan. (II) Qualified higher education expenses The term ‘‘qualified higher education expenses’’ has the same meaning as when used in section 401(m)(4)(D). (iii) Applicable rules Clause (i) shall apply to an arrangement only if, under the arrangement— (I) matching contributions on account of qualified student loan payments are provided only on behalf of employees otherwise eligible to elect contributions under subparagraph (A)(i)(I), and (II) all employees otherwise eligible to participate in the arrangement are eligi- ble to receive matching contributions on account of qualified student loan pay- ments. (G) Adjustment for inflation In the case of taxable years beginning after December 31, 2024, the $5,000 amount in subparagraph (A)(iv)(II) shall be increased by an amount equal to— (i) such amount, multiplied by (ii) the cost-of-living adjustment deter- mined under section 1(f)(3) for the calendar year in which the taxable year begins, de- termined by substituting ‘‘2023’’ for ‘‘2016’’ in subparagraph (A)(ii) thereof. If any amount as adjusted under the pre- ceding sentence is not a multiple of $100, such amount shall be rounded to the nearest multiple of $100. (H) 2-year grace period An eligible employer which had not more than 25 employees who received at least $5,000 of compensation from the employer for 1 or more years, and which has more than 25 such employees for any subsequent year, shall be treated for purposes of subparagraph (E)(i) as having 25 such employees for the 2 years following the last year the employer had not more than 25 such employees, and not as having made the election under sub- paragraph (E)(i)(II) for such 2 years. Rules similar to the second sentence of subpara- graph (C)(i)(II) shall apply for purposes of this subparagraph. (3) Vesting requirements The requirements of this paragraph are met with respect to a simple retirement account if the employee’s rights to any contribution to the simple retirement account are nonforfeit- able. For purposes of this paragraph, rules similar to the rules of subsection (k)(4) shall apply. (4) Participation requirements (A) In general The requirements of this paragraph are met with respect to any simple retirement account for a year only if, under the quali- fied salary reduction arrangement, all em- ployees of the employer who— (i) received at least $5,000 in compensa- tion from the employer during any 2 pre- ceding years, and (ii) are reasonably expected to receive at least $5,000 in compensation during the year, are eligible to make the election under para- graph (2)(A)(i) or receive the nonelective contribution described in paragraph (2)(B). (B) Excludable employees An employer may elect to exclude from the requirement under subparagraph (A) em- ployees described in section 410(b)(3). (5) Administrative requirements The requirements of this paragraph are met with respect to any simple retirement account if, under the qualified salary reduction ar- rangement— (A) an employer must— (i) make the elective employer contribu- tions under paragraph (2)(A)(i) not later than the close of the 30-day period fol- lowing the last day of the month with re- spect to which the contributions are to be made, and Page 1319 TITLE 26—INTERNAL REVENUE CODE § 408 (ii) make the matching contributions under paragraph (2)(A)(iii) or the nonelec- tive contributions under paragraph (2)(B) not later than the date described in sec- tion 404(m)(2)(B), (B) an employee may elect to terminate participation in such arrangement at any time during the year, except that if an em- ployee so terminates, the arrangement may provide that the employee may not elect to resume participation until the beginning of the next year, and (C) each employee eligible to participate may elect, during the 60-day period before the beginning of any year (and the 60-day pe- riod before the first day such employee is el- igible to participate), to participate in the arrangement, or to modify the amounts sub- ject to such arrangement, for such year. (6) Definitions For purposes of this subsection— (A) Compensation (i) In general The term ‘‘compensation’’ means amounts described in paragraphs (3) and (8) of section 6051(a). For purposes of the pre- ceding sentence, amounts described in sec- tion 6051(a)(3) shall be determined without regard to section 3401(a)(3). (ii) Self-employed In the case of an employee described in subparagraph (B), the term ‘‘compensa- tion’’ means net earnings from self-em- ployment determined under section 1402(a) without regard to any contribution under this subsection. The preceding sentence shall be applied as if the term ‘‘trade or business’’ for purposes of section 1402 in- cluded service described in section 1402(c)(6). (B) Employee The term ‘‘employee’’ includes an em- ployee as defined in section 401(c)(1). (C) Year The term ‘‘year’’ means the calendar year. (7) Use of designated financial institution A plan shall not be treated as failing to sat- isfy the requirements of this subsection or any other provision of this title merely because the employer makes all contributions to the individual retirement accounts or annuities of a designated trustee or issuer. The preceding sentence shall not apply unless each plan par- ticipant is notified in writing (either sepa- rately or as part of the notice under sub- section (l)(2)(C)) that the participant’s balance may be transferred without cost or penalty to another individual account or annuity in ac- cordance with subsection (d)(3)(G). (8) Coordination with maximum limitation In the case of any simple retirement ac- count— (A) subsection (a)(1) shall be applied by substituting for ‘‘the amount in effect for such taxable year under section 219(b)(1)(A)’’ the following: ‘‘the sum of the dollar amount in effect under subsection (p)(2)(A)(ii), the employer contribution required under sub- section (p)(2)(A)(iii) or (p)(2)(B)(i), whichever is applicable, and a contribution which meets the requirement of subsection (p)(2)(A)(iv) with respect to the employee’’, and (B) subsection (b)(2)(B) shall be applied by substituting for ‘‘the dollar amount in effect under section 219(b)(1)(A)’’ the following: ‘‘the sum of the dollar amount in effect under subsection (p)(2)(A)(ii), the employer contribution required under subsection (p)(2)(A)(iii) or (p)(2)(B)(i), whichever is ap- plicable, and a contribution which meets the requirement of subsection (p)(2)(A)(iv) with respect to the employee’’. (9) Matching contributions on behalf of self- employed individuals not treated as elec- tive employer contributions Any matching contribution described in paragraph (2)(A)(iii) which is made on behalf of a self-employed individual (as defined in section 401(c)) shall not be treated as an elec- tive employer contribution to a simple retire- ment account for purposes of this title. (10) Special rules for acquisitions, dispositions, and similar transactions (A) In general An employer which fails to meet any ap- plicable requirement by reason of an acquisi- tion, disposition, or similar transaction shall not be treated as failing to meet such requirement during the transition period if— (i) the employer satisfies requirements similar to the requirements of section 410(b)(6)(C)(i)(II); and (ii) the qualified salary reduction ar- rangement maintained by the employer would satisfy the requirements of this sub- section after the transaction if the em- ployer which maintained the arrangement before the transaction had remained a sep- arate employer. (B) Applicable requirement For purposes of this paragraph, the term ‘‘applicable requirement’’ means— (i) the requirement under paragraph (2)(A)(i) that an employer be an eligible employer; (ii) the requirement under paragraph (2)(D) that an arrangement be the only plan of an employer; and (iii) the participation requirements under paragraph (4). (C) Transition period For purposes of this paragraph, the term ‘‘transition period’’ means the period begin- ning on the date of any transaction de- scribed in subparagraph (A) and ending on the last day of the second calendar year fol- lowing the calendar year in which such transaction occurs. (11) Replacement of simple retirement ac- counts with safe harbor plans during plan year (A) In general Subject to the requirements of this para- graph, an employer may elect (in such form Page 1320 TITLE 26—INTERNAL REVENUE CODE § 408 and manner as the Secretary may prescribe) at any time during a year to terminate the qualified salary reduction arrangement under paragraph (2), but only if the employer establishes and maintains (as of the day after the termination date) a safe harbor plan to replace the terminated arrangement. (B) Combined limits on contributions The terminated arrangement and safe har- bor plan shall both be treated as violating the requirements of paragraph (2)(A)(ii) or section 401(a)(30) (whichever is applicable) if the aggregate elective contributions of the employee under the terminated arrangement during its last plan year and under the safe harbor plan during its transition year exceed the sum of— (i) the applicable dollar amount for such arrangement (determined on a full-year basis) under this subsection (after the ap- plication of section 414(v)) with respect to the employee for such last plan year mul- tiplied by a fraction equal to the number of days in such plan year divided by 365, and (ii) the applicable dollar amount (as so determined) under section 402(g)(1) for such safe harbor plan on such elective con- tributions during the transition year mul- tiplied by a fraction equal to the number of days in such transition year divided by 365. (C) Transition year For purposes of this paragraph, the transi- tion year is the period beginning after the termination date and ending on the last day of the calendar year during which the termi- nation occurs. (D) Safe harbor plan For purposes of this paragraph, the term ‘‘safe harbor plan’’ means a qualified cash or deferred arrangement which meets the re- quirements of paragraph (11), (12), (13), or (16) of section 401(k). (12) Roth contribution election An individual retirement plan which is des- ignated as a Roth IRA shall not be treated as a simple retirement account under this sub- section unless the employee elects for such plan to be so treated (at such time and in such manner as the Secretary may provide). (q) Deemed IRAs under qualified employer plans (1) General rule If— (A) a qualified employer plan elects to allow employees to make voluntary em- ployee contributions to a separate account or annuity established under the plan, and (B) under the terms of the qualified em- ployer plan, such account or annuity meets the applicable requirements of this section or section 408A for an individual retirement account or annuity, then such account or annuity shall be treated for purposes of this title in the same manner as an individual retirement plan and not as a qualified employer plan (and contributions to such account or annuity as contributions to an individual retirement plan and not to the qualified employer plan). For purposes of sub- paragraph (B), the requirements of subsection (a)(5) shall not apply. (2) Special rules for qualified employer plans For purposes of this title, a qualified em- ployer plan shall not fail to meet any require- ment of this title solely by reason of estab- lishing and maintaining a program described in paragraph (1). (3) Definitions For purposes of this subsection— (A) Qualified employer plan The term ‘‘qualified employer plan’’ has the meaning given such term by section 72(p)(4)(A)(i); except that such term shall also include an eligible deferred compensa- tion plan (as defined in section 457(b)) of an eligible employer described in section 457(e)(1)(A). (B) Voluntary employee contribution The term ‘‘voluntary employee contribu- tion’’ means any contribution (other than a mandatory contribution within the meaning of section 411(c)(2)(C))— (i) which is made by an individual as an employee under a qualified employer plan which allows employees to elect to make contributions described in paragraph (1), and (ii) with respect to which the individual has designated the contribution as a con- tribution to which this subsection applies. (r) Cross references (1) For tax on excess contributions in individual retirement accounts or annuities, see section 4973. (2) For tax on certain accumulations in individual retirement accounts or annuities, see section 4974. (Added Pub. L. 93–406, title II, § 2002(b), Sept. 2, 1974, 88 Stat. 959; amended Pub. L. 94–455, title XV, § 1501(b)(2), (5), (10), title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1735–1737, 1834; Pub. L. 95–600, title I, §§ 152(a), (b), 156(c)(1), (3), 157(c)(1), (d)(1), (e)(1)(A), (g)(3), (h)(2), title VII, § 703(c)(4), Nov. 6, 1978, 92 Stat. 2797, 2802, 2803, 2805, 2806, 2808, 2939; Pub. L. 96–222, title I, § 101(a)(10)(A), (C), (F), (G), (J)(i), (14)(B), (E)(ii), Apr. 1, 1980, 94 Stat. 201–205; Pub. L. 96–605, title II, § 225(b)(3), (4), Dec. 28, 1980, 94 Stat. 3529; Pub. L. 97–34, title III, §§ 311(g)(1)(A)–(C), (2), (h)(2), 312(b)(2), (c)(5), 313(b)(2), 314(b)(1), Aug. 13, 1981, 95 Stat. 281–284, 286; Pub. L. 97–248, title II, §§ 237(e)(3), 238(d)(3), (4), 243(a), (b)(1)(A), title III, § 335(a)(1), Sept. 3, 1982, 96 Stat. 512, 513, 521, 522, 628; Pub. L. 97–448, title I, § 103(d)(1), (e), Jan. 12, 1983, 96 Stat. 2378; Pub. L. 98–369, div. A, title I, § 147(a), title IV, § 491(d)(19)–(24), title V, §§ 521(b), 522(d)(12), title VII, § 713(c)(2)(B), (f)(2), (5)(B), (g)(2), (j), July 18, 1984, 98 Stat. 687, 850, 867, 871, 957, 959, 960; Pub. L. 99–514, title XI, §§ 1102(a), (b)(2), (c), (e)(2), 1108(a), (d)–(g)(1), (4), (6), 1121(c)(2), 1122(e)(2)(B), 1123(d)(2), 1144(a), title XVIII, §§ 1852(a)(1), (5)(C), (7)(A), 1875(c)(6)(A), (8), 1898(a)(5), Oct. 22, 1986, 100 Stat. 2414–2416, 2431, 2433, 2434, 2465, 2470, 2475, 2490, 2864–2866, 2895, 2944; Pub. L. 100–647, title I, §§ 1011(b)(1)–(3), (c)(7)(C), (f)(1)–(5), (10), (i)(5), 1011A(a)(2)(A), Page 1321 TITLE 26—INTERNAL REVENUE CODE § 408 1018(t)(3)(D), title VI, § 6057(a), Nov. 10, 1988, 102 Stat. 3456, 3458, 3461–3463, 3468, 3472, 3588, 3698; Pub. L. 101–239, title VII, §§ 7811(m)(7), 7841(a)(1), Dec. 19, 1989, 103 Stat. 2412, 2427; Pub. L. 102–318, title V, § 521(b)(16)–(19), July 3, 1992, 106 Stat. 311; Pub. L. 103–66, title XIII, § 13212(b), Aug. 10, 1993, 107 Stat. 472; Pub. L. 103–465, title VII, § 732(d), Dec. 8, 1994, 108 Stat. 5005; Pub. L. 104–188, title I, §§ 1421(a), (b)(3)(B), (5), (6), (c), 1427(b)(3), 1431(c)(1)(B), 1455(b)(1), Aug. 20, 1996, 110 Stat. 1792, 1796–1798, 1802, 1803, 1817; Pub. L. 105–34, title III, §§ 302(d), 304(a), title XV, § 1501(b), title XVI, § 1601(d)(1)(A)–(C)(i), (D)–(G), Aug. 5, 1997, 111 Stat. 829, 831, 1058, 1087, 1088; Pub. L. 105–206, title VI, §§ 6015(a), 6016(a)(1), 6018(b), July 22, 1998, 112 Stat. 820–822; Pub. L. 106–554, § 1(a)(7) [title III, § 319(3)], Dec. 21, 2000, 114 Stat. 2763, 2763A–646; Pub. L. 107–16, title VI, §§ 601(b), 602(a), 611(c)(1), (f)(1), (2), (g)(2), 641(e)(8), 642(a), (b)(2), (3), 643(c), 644(b), June 7, 2001, 115 Stat. 95, 97, 99, 121–123; Pub. L. 107–147, title IV, § 411(i)(1), (j)(1), Mar. 9, 2002, 116 Stat. 46, 47; Pub. L. 108–311, title IV, §§ 404(d), 408(a)(12), (13), Oct. 4, 2004, 118 Stat. 1188, 1191; Pub. L. 109–280, title XII, § 1201(a), Aug. 17, 2006, 120 Stat. 1063; Pub. L. 109–432, div. A, title III, § 307(a), Dec. 20, 2006, 120 Stat. 2951; Pub. L. 110–172, § 3(a), Dec. 29, 2007, 121 Stat. 2474; Pub. L. 110–343, div. C, title II, § 205(a), Oct. 3, 2008, 122 Stat. 3865; Pub. L. 111–312, title VII, § 725(a), Dec. 17, 2010, 124 Stat. 3316; Pub. L. 112–240, title II, § 208(a), Jan. 2, 2013, 126 Stat. 2324; Pub. L. 113–295, div. A, title I, § 108(a), title II, § 221(a)(53), Dec. 19, 2014, 128 Stat. 4013, 4045; Pub. L. 114–113, div. Q, title I, § 112(a), title III, § 306(a), Dec. 18, 2015, 129 Stat. 3047, 3089; Pub. L. 115–97, title I, § 11051(b)(3)(G), Dec. 22, 2017, 131 Stat. 2090; Pub. L. 115–141, div. U, title IV, § 401(a)(75), (76), Mar. 23, 2018, 132 Stat. 1187; Pub. L. 116–94, div. O, title I, §§ 101(a)(3), 107(b), 114(c), 116(a)(1), Dec. 20, 2019, 133 Stat. 3141, 3149, 3156, 3161; Pub. L. 117–328, div. T, title I, §§ 107(d), 110(d), 116(a), (b)(1), 117(a), (c)–(f), title III, §§ 307(a), (b), 322(a), 332(a), (b)(2), title IV, § 401(b)(4), title VI, § 601(b)(3), (c)(1), Dec. 29, 2022, 136 Stat. 5289, 5292, 5298–5301, 5343, 5345, 5356, 5367, 5368, 5388, 5390.) INFLATION ADJUSTED ITEMS FOR CERTAIN YEARS For inflation adjustment of certain items in this section, see Internal Revenue Notices listed in a table under section 401 of this title. Editorial Notes REFERENCES IN TEXT Paragraph (6) or (7) of section 101 of the Federal Cred- it Union Act, referred to in subsec. (n)(2), is classified to section 1752(6), (7) of Title 12, Banks and Banking. AMENDMENTS 2022—Subsec. (b). Pub. L. 117–328, § 107(d), in con- cluding provisions, substituted ‘‘the applicable age (de- termined under section 401(a)(9)(C)(v) for the calendar year in which such taxable year begins)’’ for ‘‘age 72’’. Subsec. (d)(3)(G). Pub. L. 117–328, § 332(b)(2), sub- stituted ‘‘72(t)(6)(A)’’ for ‘‘72(t)(6)’’. Subsec. (d)(8)(F). Pub. L. 117–328, § 307(a), added sub- par. (F). Subsec. (d)(8)(G). Pub. L. 117–328, § 307(b), added sub- par. (G). Subsec. (e)(2)(A)(iii). Pub. L. 117–328, § 322(a), added cl. (iii). Subsec. (k)(7) to (10). Pub. L. 117–328, § 601(b)(3), added par. (7) and redesignated former pars. (7) to (9) as (8) to (10), respectively. Subsec. (o)(5)(A). Pub. L. 117–328, § 401(b)(4), sub- stituted ‘‘section 219(b)’’ for ‘‘subsection (b)’’. Subsec. (p)(2)(A). Pub. L. 117–328, § 116(a)(2), inserted concluding provisions. Subsec. (p)(2)(A)(iv). Pub. L. 117–328, § 116(a)(1), added cl. (iv). Former cl. (iv) redesignated (v). Subsec. (p)(2)(A)(v). Pub. L. 117–328, § 116(b)(1), sub- stituted ‘‘, (iii), or (iv)’’ for ‘‘or (iii)’’. Pub. L. 117–328, § 116(a)(1), redesignated cl. (iv) as (v). Subsec. (p)(2)(B)(iii). Pub. L. 117–328, § 117(d), added cl. (iii). Subsec. (p)(2)(C)(ii)(I). Pub. L. 117–328, § 117(c)(1), sub- stituted ‘‘Except as provided in subclause (IV), the term’’ for ‘‘The term’’. Subsec. (p)(2)(C)(ii)(II), (III). Pub. L. 117–328, § 117(c)(3), substituted ‘‘the applicable percentage’’ for ‘‘3 percent’’. Subsec. (p)(2)(C)(ii)(IV). Pub. L. 117–328, § 117(c)(2), added subcl. (IV). Subsec. (p)(2)(E)(i) to (iii). Pub. L. 117–328, § 117(a), substituted ‘‘dollar amount is—’’ and subcls. (I) to (III) for ‘‘amount is $10,000.’’ in cl. (i), added cl. (ii) and re- designated former cl. (ii) as (iii), and, in cl. (iii), des- ignated existing provisions as subcl. (I), inserted subcl. heading, substituted ‘‘clause (i)(III)’’ for ‘‘clause (i)’’, and added subcl. (II). Subsec. (p)(2)(E)(iv). Pub. L. 117–328, § 117(f), added cl. (iv). Subsec. (p)(2)(F). Pub. L. 117–328, § 110(d), added sub- par. (F). Subsec. (p)(2)(G). Pub. L. 117–328, § 116(a)(4), added subpar. (G). Subsec. (p)(2)(H). Pub. L. 117–328, § 117(e), added sub- par. (H). Subsec. (p)(8). Pub. L. 117–328, § 116(a)(3), amended par. (8) generally. Prior to amendment, text read as follows: ‘‘In the case of any simple retirement account, sub- sections (a)(1) and (b)(2) shall be applied by sub- stituting ‘the sum of the dollar amount in effect under paragraph (2)(A)(ii) of this subsection and the employer contribution required under subparagraph (A)(iii) or (B)(i) of paragraph (2) of this subsection, whichever is applicable’ for ‘the dollar amount in effect under sec- tion 219(b)(1)(A)’.’’ Subsec. (p)(11). Pub. L. 117–328, § 332(a), added par. (11). Subsec. (p)(12). Pub. L. 117–328, § 601(c)(1), added par. (12). 2019—Subsec. (b). Pub. L. 116–94, § 114(c), substituted ‘‘age 72’’ for ‘‘age 701⁄2’’ in concluding provisions. Subsec. (c)(3). Pub. L. 116–94, § 101(a)(3), added par. (3). Subsec. (d)(8)(A). Pub. L. 116–94, § 107(b), inserted at end ‘‘The amount of distributions not includible in gross income by reason of the preceding sentence for a taxable year (determined without regard to this sen- tence) shall be reduced (but not below zero) by an amount equal to the excess of—’’ and added cls. (i) and (ii). Subsec. (o)(5). Pub. L. 116–94, § 116(a)(1), added par. (5). 2018—Subsec. (a)(1). Pub. L. 115–141, § 401(a)(75), in- serted ‘‘or’’ after ‘‘subsection (d)(3)’’. Subsec. (m)(3)(B). Pub. L. 115–141, § 401(a)(76), sub- stituted ‘‘section 5’’ for ‘‘section 7’’. 2017—Subsec. (d)(6). Pub. L. 115–97 substituted ‘‘clause (i) of section 121(d)(3)(C)’’ for ‘‘subparagraph (A) of sec- tion 71(b)(2)’’. 2015—Subsec. (d)(8)(F). Pub. L. 114–113, § 112(a), struck out subpar. (F). Text read as follows: ‘‘This paragraph shall not apply to distributions made in taxable years beginning after December 31, 2014.’’ Subsec. (p)(1)(B). Pub. L. 114–113, § 306(a), inserted ‘‘except in the case of a rollover contribution described in subsection (d)(3)(G) or a rollover contribution other- wise described in subsection (d)(3) or in section 402(c), 403(a)(4), 403(b)(8), or 457(e)(16), which is made after the 2-year period described in section 72(t)(6),’’ before ‘‘with respect to which the only contributions allowed’’. 2014—Subsec. (d)(8)(F). Pub. L. 113–295, § 108(a), sub- stituted ‘‘December 31, 2014’’ for ‘‘December 31, 2013’’. Subsec. (p)(2)(E)(i). Pub. L. 113–295, § 221(a)(53), amended cl. (i) generally. Prior to amendment, cl. (i) Page 1322 TITLE 26—INTERNAL REVENUE CODE § 408 listed applicable dollar amounts for subsec. (p)(2)(A)(ii) for calendar years 2002 to 2005 and thereafter. 2013—Subsec. (d)(8)(F). Pub. L. 112–240 substituted ‘‘December 31, 2013’’ for ‘‘December 31, 2011’’. 2010—Subsec. (d)(8)(F). Pub. L. 111–312 substituted ‘‘December 31, 2011’’ for ‘‘December 31, 2009’’. 2008—Subsec. (d)(8)(F). Pub. L. 110–343 substituted ‘‘December 31, 2009’’ for ‘‘December 31, 2007’’. 2007—Subsec. (d)(8)(D). Pub. L. 110–172 substituted ‘‘all amounts in all individual retirement plans of the individual were distributed during such taxable year and all such plans were treated as 1 contract for pur- poses of determining under section 72 the aggregate amount which would have been so includible’’ for ‘‘all amounts distributed from all individual retirement plans were treated as 1 contract under paragraph (2)(A) for purposes of determining the inclusion of such dis- tribution under section 72’’. 2006—Subsec. (d)(8). Pub. L. 109–280, which directed the amendment of section 408(d) by adding par. (8), without specifying the act to be amended, was executed by making the addition to this section, which is section 408 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress. Subsec. (d)(9). Pub. L. 109–432 added par. (9). 2004—Subsec. (a)(1). Pub. L. 108–311, § 408(a)(12), sub- stituted ‘‘457(e)(16),’’ for ‘‘457(e)(16)’’. Subsec. (n)(2). Pub. L. 108–311, § 408(a)(13), substituted ‘‘paragraph (6) or (7) of section 101’’ for ‘‘section 101(6)’’. Subsec. (p)(6)(A)(i). Pub. L. 108–311, § 404(d), inserted at end ‘‘For purposes of the preceding sentence, amounts described in section 6051(a)(3) shall be deter- mined without regard to section 3401(a)(3).’’ 2002—Subsec. (k)(2)(C). Pub. L. 107–147, § 411(j)(1)(A), substituted ‘‘$450’’ for ‘‘$300’’. Subsec. (k)(8). Pub. L. 107–147, § 411(j)(1)(B), sub- stituted ‘‘$450’’ for ‘‘$300’’ in two places. Subsec. (q)(3)(A). Pub. L. 107–147, § 411(i)(1), reenacted heading without change and amended text of subpar. (A) generally. Prior to amendment, text read as fol- lows: ‘‘The term ‘qualified employer plan’ has the meaning given such term by section 72(p)(4); except such term shall not include a government plan which is not a qualified plan unless the plan is an eligible de- ferred compensation plan (as defined in section 457(b)).’’ 2001—Subsec. (a)(1). Pub. L. 107–16, § 641(e)(8), sub- stituted ‘‘403(b)(8), or 457(e)(16)’’ for ‘‘or 403(b)(8),’’. Pub. L. 107–16, § 601(b)(1), substituted ‘‘on behalf of any individual in excess of the amount in effect for such taxable year under section 219(b)(1)(A)’’ for ‘‘in ex- cess of $2,000 on behalf of any individual’’. Subsec. (b). Pub. L. 107–16, § 601(b)(3), substituted ‘‘the dollar amount in effect under section 219(b)(1)(A)’’ for ‘‘$2,000’’ in concluding provisions. Subsec. (b)(2)(B). Pub. L. 107–16, § 601(b)(2), substituted ‘‘the dollar amount in effect under section 219(b)(1)(A)’’ for ‘‘$2,000’’. Subsec. (d)(3)(A). Pub. L. 107–16, § 642(a), inserted ‘‘or’’ at end of cl. (i), added cl. (ii) and concluding provisions, and struck out former cls. (ii) and (iii) which read as follows: ‘‘(ii) no amount in the account and no part of the value of the annuity is attributable to any source other than a rollover contribution (as defined in section 402) from an employee’s trust described in section 401(a) which is exempt from tax under section 501(a) or from an annuity plan described in section 403(a) (and any earnings on such contribution), and the entire amount received (including property and other money) is paid (for the benefit of such individual) into another such trust or annuity plan not later than the 60th day on which the individual receives the payment or the dis- tribution; or ‘‘(iii)(I) the entire amount received (including money and other property) represents the entire interest in the account or the entire value of the annuity, ‘‘(II) no amount in the account and no part of the value of the annuity is attributable to any source other than a rollover contribution from an annuity contract described in section 403(b) and any earnings on such rollover, and ‘‘(III) the entire amount thereof is paid into another annuity contract described in section 403(b) (for the benefit of such individual) not later than the 60th day after he receives the payment or distribution.’’ Subsec. (d)(3)(D)(i). Pub. L. 107–16, § 642(b)(2), sub- stituted ‘‘(i) or (ii)’’ for ‘‘(i), (ii), or (iii)’’. Subsec. (d)(3)(G). Pub. L. 107–16, § 642(b)(3), reenacted heading without change and amended text of subpar. (G) generally. Prior to amendment, text read as fol- lows: ‘‘This paragraph shall not apply to any amount paid or distributed out of a simple retirement account (as defined in subsection (p)) unless— ‘‘(i) it is paid into another simple retirement ac- count, or ‘‘(ii) in the case of any payment or distribution to which section 72(t)(6) does not apply, it is paid into an individual retirement plan.’’ Subsec. (d)(3)(H). Pub. L. 107–16, § 643(c), added subpar. (H). Subsec. (d)(3)(I). Pub. L. 107–16, § 644(b), added subpar. (I). Subsec. (j). Pub. L. 107–16, § 601(b)(4), struck out ‘‘$2,000’’ before ‘‘amounts’’. Subsec. (k)(3)(C), (6)(D)(ii), (8). Pub. L. 107–16, § 611(c)(1), substituted ‘‘$200,000’’ for ‘‘$150,000’’. Subsec. (p)(2)(A)(ii). Pub. L. 107–16, § 611(f)(1), sub- stituted ‘‘the applicable dollar amount’’ for ‘‘$6,000’’. Subsec. (p)(2)(E). Pub. L. 107–16, § 611(f)(2), amended heading and text of subpar. (E) generally. Prior to amendment, text read as follows: ‘‘The Secretary shall adjust the $6,000 amount under subparagraph (A)(ii) at the same time and in the same manner as under section 415(d), except that the base period taken into account shall be the calendar quarter ending September 30, 1996, and any increase under this subparagraph which is not a multiple of $500 shall be rounded to the next lower multiple of $500.’’ Subsec. (p)(6)(A)(ii). Pub. L. 107–16, § 611(g)(2), inserted at end ‘‘The preceding sentence shall be applied as if the term ‘trade or business’ for purposes of section 1402 included service described in section 1402(c)(6).’’ Subsec. (p)(8). Pub. L. 107–16, § 601(b)(5), substituted ‘‘the dollar amount in effect under section 219(b)(1)(A)’’ for ‘‘$2,000’’. Subsecs. (q), (r). Pub. L. 107–16, § 602(a), added subsec. (q) and redesignated former subsec. (q) as (r). 2000—Subsec. (d)(5). Pub. L. 106–554 amended heading generally. Prior to amendment, heading read as fol- lows: ‘‘Certain distributions of excess contributions after due date for taxable year’’. 1998—Subsec. (d)(7). Pub. L. 105–206, § 6018(b)(2), in- serted ‘‘or simple retirement accounts’’ after ‘‘pen- sions’’ in heading. Subsec. (d)(7)(B). Pub. L. 105–206, § 6018(b)(1), inserted ‘‘or 402(k)’’ after ‘‘section 402(h)’’. Subsec. (p)(2)(C)(i)(II). Pub. L. 105–206, § 6016(a)(1)(C)(i), substituted ‘‘the preceding sentence shall not apply’’ for ‘‘the preceding sentence shall apply only in accordance with rules similar to the rules of section 410(b)(6)(C)(i)’’ in last sentence. Subsec. (p)(2)(D)(i). Pub. L. 105–206, § 6016(a)(1)(A), struck out ‘‘or (B)’’ after ‘‘(A)’’ in last sentence. Subsec. (p)(2)(D)(iii). Pub. L. 105–206, § 6016(a)(1)(C)(ii), struck out heading and text of cl. (iii). Text read as fol- lows: ‘‘In the case of an employer who establishes and maintains a plan under this subsection for 1 or more years and who fails to meet any requirement of this subsection for any subsequent year due to any acquisi- tion, disposition, or similar transaction involving an- other such employer, rules similar to the rules of sec- tion 410(b)(6)(C) shall apply for purposes of this sub- section.’’ Subsec. (p)(8), (9). Pub. L. 105–206, § 6015(a), redesig- nated par. (8), relating to matching contributions on behalf of self-employed individuals not treated as elec- tive employer contributions, as (9). Subsec. (p)(10). Pub. L. 105–206, § 6016(a)(1)(B), added par. (10). 1997—Subsec. (i). Pub. L. 105–34, § 1601(d)(1)(A), sub- stituted ‘‘31 days’’ for ‘‘30 days’’ in concluding provi- sions. Page 1323 TITLE 26—INTERNAL REVENUE CODE § 408 Pub. L. 105–34, § 302(d), struck out ‘‘under regula- tions’’ after ‘‘may require’’ in introductory provisions and struck out ‘‘in such regulations’’ after ‘‘prescribes’’ in pars. (1) and (2)(B). Subsec. (k)(6)(H). Pub. L. 105–34, § 1601(d)(1)(B), sub- stituted ‘‘of an employer if the terms of simplified em- ployee pensions of such employer’’ for ‘‘if the terms of such pension’’. Subsec. (l)(2)(B). Pub. L. 105–34, § 1601(d)(1)(C)(i), in- serted ‘‘and the issuer of an annuity established under such an arrangement’’ after ‘‘under subsection (p)’’ in introductory provisions and ‘‘or issuer’’ after ‘‘trustee’’ in cl. (i). Subsec. (m)(3). Pub. L. 105–34, § 304(a), amended head- ing and text of par. (3) generally. Prior to amendment, text read as follows: ‘‘In the case of an individual re- tirement account, paragraph (2) shall not apply to— ‘‘(A) any gold coin described in paragraph (7), (8), (9), or (10) of section 5112(a) of title 31, ‘‘(B) any silver coin described in section 5112(e) of title 31, or ‘‘(C) any coin issued under the laws of any State.’’ Subsec. (p)(2)(D)(i). Pub. L. 105–34, § 1601(d)(1)(E), in- serted at end ‘‘If only individuals other than employees described in subparagraph (A) or (B) of section 410(b)(3) are eligible to participate in such arrangement, then the preceding sentence shall be applied without regard to any qualified plan in which only employees so de- scribed are eligible to participate.’’ Subsec. (p)(2)(D)(iii). Pub. L. 105–34, § 1601(d)(1)(F), added cl. (iii). Subsec. (p)(5). Pub. L. 105–34, § 1601(d)(1)(G), sub- stituted ‘‘simple’’ for ‘‘simplified’’ in introductory pro- visions. Subsec. (p)(8). Pub. L. 105–34, § 1601(d)(1)(D), added par. (8) relating to coordination with maximum limitation under subsection (a). Pub. L. 105–34, § 1501(b), added par. (8) relating to matching contributions on behalf of self-employed indi- viduals not treated as elective employer contributions. 1996—Subsec. (d)(3)(G). Pub. L. 104–188, § 1421(b)(3)(B), added subpar. (G). Subsec. (d)(5)(A). Pub. L. 104–188, § 1427(b)(3), sub- stituted ‘‘the dollar amount in effect under section 219(b)(1)(A)’’ for ‘‘$2,250’’ in introductory provisions. Subsec. (i). Pub. L. 104–188, § 1455(b)(1), inserted ‘‘ag- gregating $10 or more in any calendar year’’ after ‘‘dis- tributions’’ in introductory provisions. Pub. L. 104–188, § 1421(b)(6), inserted at end ‘‘In the case of a simple retirement account under subsection (p), only one report under this subsection shall be re- quired to be submitted each calendar year to the Sec- retary (at the time provided under paragraph (2)) but, in addition to the report under this subsection, there shall be furnished, within 30 days after each calendar year, to the individual on whose behalf the account is maintained a statement with respect to the account balance as of the close of, and the account activity dur- ing, such calendar year.’’ Subsec. (k)(2)(C). Pub. L. 104–188, § 1431(c)(1)(B), sub- stituted ‘‘section 414(q)(4)’’ for ‘‘section 414(q)(7)’’. Subsec. (k)(6)(H). Pub. L. 104–188, § 1421(c), added sub- par. (H). Subsec. (l). Pub. L. 104–188, § 1421(b)(5), designated ex- isting provisions as par. (1), inserted heading, and added par. (2). Subsecs. (p), (q). Pub. L. 104–188, § 1421(a), added sub- sec. (p) and redesignated former subsec. (p) as (q). 1994—Subsec. (k)(8). Pub. L. 103–465 inserted before pe- riod at end ‘‘; except that any increase in the $300 amount which is not a multiple of $50 shall be rounded to the next lowest multiple of $50’’. 1993—Subsec. (k)(3)(C), (6)(D)(ii). Pub. L. 103–66, § 13212(b)(1), substituted ‘‘$150,000’’ for ‘‘$200,000’’. Subsec. (k)(8). Pub. L. 103–66, § 13212(b)(2), amended heading and text of par. (8) generally. Prior to amend- ment, text read as follows: ‘‘The Secretary shall adjust the $300 amount in paragraph (2)(C) and the $200,000 amount in paragraphs (3)(C) and (6)(D)(ii) at the same time and in the same manner as under section 415(d), except that in the case of years beginning after 1988, the $200,000 amount (as so adjusted) shall not exceed the amount in effect under section 401(a)(17).’’ 1992—Subsec. (a)(1). Pub. L. 102–318, § 521(b)(16), sub- stituted ‘‘402(c)’’ for ‘‘402(a)(5), 402(a)(7)’’. Subsec. (d)(3)(A)(ii). Pub. L. 102–318, § 521(b)(17), amended clause (ii) generally. Prior to amendment, clause (ii) read as follows: ‘‘the entire amount received (including money and any other property) represents the entire amount in the account or the entire value of the annuity and no amount in the account and no part of the value of the annuity is attributable to any source other than a rollover contribution of a qualified total distribution (as defined in section 402(a)(5)(E)(i)) from an employee’s trust described in section 401(a) which is exempt from tax under section 501(a), or an an- nuity plan described in section 403(a) and any earnings on such sums and the entire amount thereof is paid into another such trust (for the benefit of such indi- vidual) or annuity plan not later than the 60th day on which he receives the payment or distribution; or’’. Subsec. (d)(3)(B). Pub. L. 102–318, § 521(b)(18), struck out at end ‘‘Clause (ii) of subparagraph (A) shall not apply to any amount paid or distributed out of an indi- vidual retirement account or an individual retirement annuity to which an amount was contributed which was treated as a rollover contribution by section 402(a)(7) (or in the case of an individual retirement an- nuity, such section as made applicable by section 403(a)(4)(B)).’’ Subsec. (d)(3)(F). Pub. L. 102–318, § 521(b)(19), sub- stituted ‘‘402(c)(7)’’ for ‘‘402(a)(6)(H)’’. 1989—Subsecs. (a)(6), (b)(3). Pub. L. 101–239, § 7811(m)(7), struck out ‘‘(without regard to subpara- graph (C)(ii) thereof)’’ after ‘‘section 401(a)(9)’’. Subsec. (d)(6). Pub. L. 101–239, § 7841(a)(1), substituted ‘‘his spouse or former spouse under a divorce or separa- tion instrument described in subparagraph (A) of sec- tion 71(b)(2)’’ for ‘‘his former spouse under a divorce de- cree or under a written instrument incident to such di- vorce’’. 1988—Subsec. (d)(2)(C). Pub. L. 100–647, § 1011(b)(1), substituted ‘‘in which the taxable year begins’’ for ‘‘with or within which the taxable year ends’’. Subsec. (d)(3)(A). Pub. L. 100–647, § 1011A(a)(2)(A), struck out at end ‘‘Clause (ii) shall not apply during the 5-year period beginning on the date of the qualified total distribution referred to in such clause if the indi- vidual was treated as a 5-percent owner with respect to such distribution under section 402(a)(5)(F)(ii).’’ Subsec. (d)(3)(E). Pub. L. 100–647, § 1018(t)(3)(D), sub- stituted ‘‘paragraph’’ for ‘‘subparagraph’’. Subsec. (d)(4). Pub. L. 100–647, § 1011(b)(2), substituted ‘‘Contributions’’ for ‘‘Excess contributions’’ in heading, struck out ‘‘to the extent that such contribution ex- ceeds the amount allowable as a deduction under sec- tion 219’’ after ‘‘individual retirement annuity’’ in in- troductory provisions, and substituted ‘‘such contribu- tion’’ for ‘‘such excess contribution’’ in subpars. (B) and (C) and in last sentence. Subsec. (d)(5). Pub. L. 100–647, § 1011(b)(3), substituted ‘‘shall be computed without regard to section 219(g)’’ for ‘‘(after application of section 408(o)(2)(B)(ii)) shall be increased by the nondeductible limit under section 408(o)(2)(B)’’ in last sentence. Subsec. (d)(7). Pub. L. 100–647, § 1011(f)(5), added par. (7). Subsec. (k)(3)(B). Pub. L. 100–647, § 1011(i)(5), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: ‘‘For purposes of subparagraph (A)— ‘‘(i) there shall be excluded from consideration em- ployees described in subparagraph (A) or (C) of sec- tion 410(b)(3), and ‘‘(ii) an individual shall be considered a shareholder if he owns (with the application of section 318) more than 10 percent of the value of the stock of the em- ployer.’’ Subsec. (k)(3)(C). Pub. L. 100–647, § 1011(f)(3)(C), struck out ‘‘total’’ before ‘‘compensation’’. Subsec. (k)(6)(A). Pub. L. 100–647, § 1011(f)(1), sub- stituted ‘‘Arrangements which qualify’’ for ‘‘In gen- Page 1324 TITLE 26—INTERNAL REVENUE CODE § 408 eral’’ in heading and amended text generally. Prior to amendment, text read as follows: ‘‘A simplified em- ployee pension shall not fail to meet the requirements of this subsection for a year merely because, under the terms of the pension— ‘‘(i) an employee may elect to have the employer make payments— ‘‘(I) as elective employer contributions to the simplified employee pension on behalf of the em- ployee, or ‘‘(II) to the employee directly in cash, ‘‘(ii) an election described in clause (i)(I) is made or is in effect with respect to not less than 50 percent of the employees of the employer, and ‘‘(iii) the deferral percentage for such year of each highly compensated employee eligible to participate is not more than the product derived by multiplying the average of the deferral percentages for such year of all employees (other than highly compensated em- ployees) eligible to participate by 1.25.’’ Subsec. (k)(6)(A)(iv). Pub. L. 100–647, § 1011(c)(7)(C), added cl. (iv). Subsec. (k)(6)(B). Pub. L. 100–647, § 1011(f)(2), inserted ‘‘who were eligible to participate (or would have been required to be eligible to participate if a pension was maintained)’’ after ‘‘than 25 employees’’. Subsec. (k)(6)(D)(ii). Pub. L. 100–647, § 1011(f)(3)(A), substituted ‘‘(not in excess of the first $200,000)’’ for ‘‘(within the meaning of section 414(s))’’. Subsec. (k)(6)(F), (G). Pub. L. 100–647, § 1011(f)(4), added subpar. (f) and redesignated former subpar. (F) as (G). Subsec. (k)(7)(B). Pub. L. 100–647, § 1011(f)(3)(B), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: ‘‘The term ‘compensation’ means, in the case of an employee within the meaning of section 401(c)(1), earned income within the meaning of section 401(c)(2).’’ Subsec. (k)(8). Pub. L. 100–647, § 1011(f)(3)(D), (10), sub- stituted ‘‘paragraphs (3)(C) and (6)(D)(ii)’’ for ‘‘para- graph (3)(C)’’ and inserted ‘‘, except that in the case of years beginning after 1988, the $200,000 amount (as so adjusted) shall not exceed the amount in effect under section 401(a)(17)’’ after ‘‘under section 415(d)’’. Subsec. (m)(3). Pub. L. 100–647, § 6057(a), amended par. (3) generally. Prior to amendment, par. (3) read as fol- lows: ‘‘In the case of an individual retirement account, paragraph (2) shall not apply to any gold coin described in paragraph (7), (8), (9), or (10) of section 5112(a) of title 31 or any silver coin described in section 5112(e) of title 31.’’ Subsec. (o)(4)(B)(iv). Pub. L. 100–647, § 1011(b)(1), sub- stituted ‘‘in which the taxable year begins’’ for ‘‘with or within which the taxable year ends’’. 1986—Subsecs. (a)(6), (b)(3). Pub. L. 99–514, § 1852(a)(1), substituted ‘‘(without regard to subparagraph (C)(ii) thereof) and the incidental death benefit requirements of section 401(a)’’ for ‘‘(relating to required distribu- tions)’’. Subsec. (c)(1). Pub. L. 99–514, § 1852(a)(7)(A), sub- stituted ‘‘paragraphs (1) through (6)’’ for ‘‘paragraphs (1) through (7)’’. Subsec. (d)(1). Pub. L. 99–514, § 1102(c), amended par. (1) generally. Prior to amendment, par. (1) read as fol- lows: ‘‘Except as otherwise provided in this subsection, any amount paid or distributed out of an individual re- tirement account or under an individual retirement an- nuity shall be included in gross income by the payee or distributee, as the case may be, for the taxable year in which the payment or distribution is received. Not- withstanding any other provision of this title (includ- ing chapters 11 and 12), the basis any person in such an account or annuity is zero.’’ Subsec. (d)(2). Pub. L. 99–514, § 1102(c), substituted ‘‘Special rules for applying section 72’’ for ‘‘Distribu- tions of annuity contracts’’ in heading and amended par. generally. Prior to amendment, par. (2) read as fol- lows: ‘‘Paragraph (1) does not apply to any annuity con- tract which meets the requirements of paragraphs (1), (3), (4), and (5) of subsection (b) and which is distributed from an individual retirement account. Section 72 ap- plies to any such annuity contract, and for purposes of section 72 the investment in such contract is zero.’’ Subsec. (d)(3)(A). Pub. L. 99–514, § 1875(c)(8)(C), in- serted at end ‘‘Clause (ii) shall not apply during the 5- year period beginning on the date of the qualified total distribution referred to in such clause if the individual was treated as a 5-percent owner with respect to such distribution under section 402(a)(5)(F)(ii).’’ Subsec. (d)(3)(A)(ii). Pub. L. 99–514, § 1875(c)(8)(A), (B), struck out ‘‘(other than a trust forming part of a plan under which the individual was an employee within the meaning of section 401(c)(1) at the time contributions were made on his behalf under the plan)’’ after ‘‘section 501(a)’’ and struck out ‘‘(other than a plan under which the individual was an employee within the meaning of section 401(c)(1) at the time contributions were made on his behalf under the plan)’’ after ‘‘section 403(a)’’. Pub. L. 99–514, § 1121(c)(2), made amendment identical to Pub. L. 99–514, § 1875(c)(8)(A), (B), see above. Subsec. (d)(3)(E). Pub. L. 99–514, § 1852(a)(5)(C), added subpar. (E). Subsec. (d)(3)(F). Pub. L. 99–514, § 1122(e)(2)(B), added subpar. (F). Subsec. (d)(5). Pub. L. 99–514, § 1102(b)(2), inserted at end ‘‘For purposes of this paragraph, the amount allow- able as a deduction under section 219 (after application of section 408(o)(2)(B)(ii)) shall be increased by the non- deductible limit under section 408(o)(2)(B).’’ Subsec. (d)(5)(A). Pub. L. 99–514, § 1875(c)(6)(A), sub- stituted ‘‘the dollar limitation in effect under section 415(c)(1)(A) for such taxable year’’ for ‘‘$15,000’’. Subsec. (f). Pub. L. 99–514, § 1123(d)(2), struck out sub- sec. (f) which related to additional tax on certain amounts included in gross income before age 591⁄2. Subsec. (i). Pub. L. 99–514, § 1102(e)(2), amended last sentence generally. Prior to amendment, last sentence read as follows: ‘‘The reports required by this sub- section shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required by those regulations.’’ Subsec. (k)(2). Pub. L. 99–514, § 1108(d), amended par. (2) generally. Prior to amendment, par. (2) read as fol- lows: ‘‘This paragraph is satisfied with respect to a simplified employee pension for a calendar year only if for such year the employer contributes to the sim- plified employee pension of each employee who— ‘‘(A) has attained age 21, and ‘‘(B) has performed service for the employer during at least 3 of the immediately preceding 5 calendar years. For purposes of this paragraph, there shall be excluded from consideration employees described in subpara- graph (A) or (C) of section 410(b)(3).’’ Subsec. (k)(2)(A). Pub. L. 99–514, § 1898(a)(5), sub- stituted ‘‘age 21’’ for ‘‘age 25’’. Subsec. (k)(3)(A). Pub. L. 99–514, § 1108(g)(4), sub- stituted ‘‘year’’ for ‘‘calendar year’’. Pub. L. 99–514, § 1108(g)(1)(A), substituted ‘‘any highly compensated employee (within the meaning of section 414(q))’’ for ‘‘any employee who is— ‘‘(i) an officer, ‘‘(ii) a shareholder, ‘‘(iii) a self-employed individual, or ‘‘(iv) highly compensated’’. Subsec. (k)(3)(C). Pub. L. 99–514, § 1108(g)(1)(B), in- serted ‘‘and except as provided in subparagraph (D),’’ and ‘‘(other than contributions under an arrangement described in paragraph (6))’’, and struck out end sen- tence which read as follows: ‘‘The Secretary shall annu- ally adjust the $200,000 amount contained in the pre- ceding sentence at the same time and in the same man- ner as he adjusts the dollar amount contained in sec- tion 415(c)(1)(A).’’ Subsec. (k)(3)(D), (E). Pub. L. 99–514, § 1108(g)(1)(C), added subpar. (D) and struck out former subpar. (D), treatment of certain contributions and taxes, which read ‘‘Except as provided in this subparagraph, em- ployer contributions do not meet the requirements of this paragraph unless such contributions meet the re- Page 1325 TITLE 26—INTERNAL REVENUE CODE § 408 quirements of this paragraph without taking into ac- count contributions or benefits under chapter 2 (relat- ing to tax on self-employment income), chapter 21 (re- lating to Federal Insurance Contribution Act), title II of the Social Security Act, or any other Federal or State law. If the employer does not maintain an inte- grated plan at any time during the taxable year, OASDI contributions (as defined in section 401(l)(2)) may, for purposes of this paragraph, be taken into ac- count as contributions by the employer to the employ- ee’s simplified employee pension, but only if such con- tributions are so taken into account with respect to each employee maintaining a simplified employee pen- sion.’’, and former subpar. (E), integrated plan defined, which read ‘‘For purposes of subparagraph (D), the term ‘integrated plan’ means a plan which meets the requirements of section 401(a) or 403(a) but would not meet such requirements if contributions or benefits under chapter 2 (relating to tax on self-employment in- come), chapter 21 (relating to Federal Insurance Con- tributions Act), title II of the Social Security Act, or any other Federal or State law were not taken into ac- count.’’ Subsec. (k)(6). Pub. L. 99–514, § 1108(a), added par. (6). Subsec. (k)(7)(C). Pub. L. 99–514, § 1108(f), added sub- par. (C). Subsec. (k)(8). Pub. L. 99–514, § 1108(e), added par. (8). Subsec. (k)(9). Pub. L. 99–514, § 1108(g)(6), added par. (9). Subsec. (m)(3). Pub. L. 99–514, § 1144(a), added par. (3). Subsecs. (o), (p). Pub. L. 99–514, § 1102(a), added subsec. (o) and redesignated former subsec. (o) as (p). 1984—Subsec. (a)(1). Pub. L. 98–369, § 491(d)(19), sub- stituted ‘‘or 403(b)(8)’’ for ‘‘403(b)(8), 405(d)(3), or 409(b)(3)(C)’’. Subsec. (a)(6). Pub. L. 98–369, § 521(b)(1), added par. (6) and struck out former par. (6) which provided that the entire interest of an individual for whose benefit the trust is maintained will be distributed to him not later than the close of his taxable year in which he attains age 701⁄2, or will be distributed, commencing before the close of such taxable year, in accordance with regula- tions prescribed by the Secretary, over (A) the life of such individual or the lives of such individual and his spouse, or (B) a period not extending beyond the life ex- pectancy of such individual or the life expectancy of such individual and his spouse. Subsec. (a)(7). Pub. L. 98–369, § 521(b)(1), struck out par. (7) which provided that if (A) an individual for whose benefit the trust is maintained dies before his entire interest has been distributed to him, or (B) dis- tribution has been commenced as provided in paragraph (6) to his surviving spouse and such surviving spouse dies before the entire interest has been distributed to such spouse, the entire interest (or the remaining part of such interest if distribution thereof has commenced) will be distributed within 5 years after his death (or the death of the surviving spouse). The preceding sentence shall not apply if distributions over a term certain commenced before the death of the individual for whose benefit the trust was maintained and the term certain is for a period permitted under paragraph (6). Subsec. (b)(3). Pub. L. 98–369, § 521(b)(2), added par. (3) and struck out former par. (3) which provided that the entire interest of the owner will be distributed to him not later than the close of his taxable year in which he attains age 701⁄2, or will be distributed, in accordance with regulations prescribed by the Secretary, over (A) the life of such owner or the lives of such owner and his spouse, or (B) a period not extending beyond the life ex- pectancy of such owner or the life expectancy of such owner and his spouse. Subsec. (b)(4), (5). Pub. L. 98–369, § 521(b)(2), redesig- nated par. (5) as (4) and struck out former par. (4) which provided that if (A) the owner dies before his entire in- terest has been distributed to him, or (B) distribution has been commenced as provided in paragraph (3) to his surviving spouse and such surviving spouse dies before the entire interest has been distributed to such spouse, the entire interest (or the remaining part of such inter- est if distribution thereof has commenced) will be dis- tributed within 5 years after his death (or the death of the surviving spouse). The preceding sentence shall not apply if distributions over a term certain commenced before the death of the owner and the term certain is for a period permitted under paragraph (3). Subsec. (d)(3)(A)(i). Pub. L. 98–369, § 491(d)(20), struck out ‘‘or retirement bond’’ before ‘‘for the benefit’’. Subsec. (d)(3)(A)(ii). Pub. L. 98–369, § 522(d)(12), sub- stituted ‘‘rollover contribution of a qualified total dis- tribution (as defined in section 402(a)(5)(E)(i)) from an employee’s trust’’ for ‘‘rollover contribution from an employee’s trust’’. Subsec. (d)(3)(B). Pub. L. 98–369, § 491(d)(21), sub- stituted ‘‘or an individual retirement annuity’’ for ‘‘, individual retirement annuity, or a retirement bond’’. Subsec. (d)(3)(C), (D). Pub. L. 98–369, § 713(g)(2), des- ignated the subpar. (C), as added by section 335(a)(1) of Pub. L. 97–248, relating to permitting partial rollovers, as subpar. (D). Subsec. (d)(3)(D)(ii). Pub. L. 98–369, § 491(d)(22), struck out ‘‘bond,’’ after ‘‘annuity,’’. Subsec. (d)(6). Pub. L. 98–369, § 491(d)(23), substituted ‘‘or an individual retirement annuity’’ for ‘‘, individual retirement annuity, or retirement bond’’, and ‘‘or an- nuity’’ for ‘‘, annuity, or bond’’. Subsec. (h). Pub. L. 98–369, § 713(c)(2)(B), substituted ‘‘(as defined in subsection (n))’’ for ‘‘(as defined in sec- tion 401(d)(1))’’. Subsec. (i). Pub. L. 98–369, § 147(a), inserted ‘‘(and the years to which they relate)’’. Subsec. (k)(1). Pub. L. 98–369, § 713(f)(2), amended par. (1) generally, designating existing provisions as subpar. (A) and adding subpar. (B). Subsec. (k)(3)(C). Pub. L. 98–369, § 713(f)(5)(B), inserted provision which required annual adjustment of the $200,000 amount concurrently with the dollar amount adjustment in section 415(c)(1)(A). Subsec. (k)(3)(D). Pub. L. 98–369, § 713(j), substituted in penultimate sentence ‘‘OASDI contributions (as de- fined in section 401(l)(2)’’ for ‘‘taxes paid under section 3111 (relating to tax on employers) with respect to an employee’’ and ‘‘as contributions by the employer to the employee’s simplified employee pension, but only if such contributions are so taken into account with re- spect to each employee maintaining a simplified em- ployee pension’’ for ‘‘as a contribution by the employer to an employee’s simplified pension’’ and struck out third sentence which provided ‘‘If contributions are made to the simplified employee pension of an owner- employee, the preceding sentence shall not apply un- less taxes paid by all such owner-employees under chapter 2, and the taxes which would be payable under chapter 2 by such owner-employees but for paragraphs (4) and (5) of section 1402(c), are taken into account as contributions by the employer on behalf of such owner- employees.’’ Subsec. (k)(3)(E). Pub. L. 98–369, § 491(d)(24), sub- stituted ‘‘or 403(a)’’ for ‘‘, 403(a), or 405(a)’’. 1983—Subsec. (j). Pub. L. 97–448, § 103(d)(1)(B), sub- stituted ‘‘$17,000’’ for ‘‘$15,000’’ in provisions preceding par. (1). Subsec. (k)(3)(C)(ii). Pub. L. 97–448, § 103(d)(1)(A), in- serted ‘‘(other than an employee within the meaning of section 401(c)(1))’’ after ‘‘a simplified employee pension on behalf of each employee’’. Subsecs. (m), (n). Pub. L. 97–448, § 103(e)(1), amended directory language of Pub. L. 97–34, § 314(b)(1), thereby correcting subsec. designations. See 1981 Amendment note below for subsecs. (m) and (n). 1982—Subsec. (a)(2). Pub. L. 97–248, § 237(e)(3)(A), sub- stituted reference to subsection (n) of this section, for reference to section 401(d)(1). Subsec. (a)(7). Pub. L. 97–248, § 243(a)(1), amended par. (7) generally, designating existing provisions as sub- pars. (A) and (B), in subpar. (B), as so designated, strik- ing out ‘‘if’’ before ‘‘distribution’’, in provisions fol- lowing subpar. (B) substituting ‘‘will be distributed within 5 years after his death (or the death of the sur- Page 1326 TITLE 26—INTERNAL REVENUE CODE § 408 viving spouse)’’ for ‘‘will, within 5 years after his death (or the death of the surviving spouse), be distributed, or applied to the purchase of an immediate annuity for his beneficiary or beneficiaries (or the beneficiary or bene- ficiaries of his surviving spouse) which will be payable for the life of such beneficiary or beneficiaries (or for a term certain not extending beyond the life expect- ancy of such beneficiary or beneficiaries) and which an- nuity will be immediately distributed to such bene- ficiary or beneficiaries’’, and substituting ‘‘shall not apply’’ for ‘‘does not apply’’. Subsec. (b)(4). Pub. L. 97–248, § 243(a)(2), amended par. (4) generally, designating existing provisions, as sub- pars. (A) and (B), in subpar. (B), as so redesignated, striking out ‘‘if’’ before ‘‘distribution’’, in provisions following subpar. (B) substituting ‘‘will be distributed within 5 years after his death (or the death of the sur- viving spouse)’’ for ‘‘will, within 5 years after his death (or the death of the surviving spouse), be distributed, or applied to the purchase of an immediate annuity for his beneficiary or beneficiaries (or the beneficiary or bene- ficiaries of his surviving spouse) which will be payable for the life of such beneficiary or beneficiaries (or for a term certain not extending beyond the life expect- ancy of such beneficiary or beneficiaries) and which an- nuity will be immediately distributed to such bene- ficiary or beneficiaries’’, and substituting ‘‘shall not apply’’ for ‘‘shall have no application’’. Subsec. (d)(3)(C). Pub. L. 97–248, § 243(b)(1)(A), added subpar. (C) relating to denial of rollover treatment for inherited accounts. Pub. L. 97–248, § 335(a)(1), added subpar. (C) relating to permitting partial rollovers. Subsec. (j). Pub. L. 97–248, § 238(d)(3), amended subsec. (j) generally, substituting provisions increasing amount by the amount of the limitation in effect under section 415(c)(1)(A), for provisions increasing amount by substituting ‘‘$15,000’’ for ‘‘$2,000’’. Subsec. (k)(1). Pub. L. 97–248, § 238(d)(4)(B), struck out reference to par. (6) of this subsection. Subsec. (k)(3)(C). Pub. L. 97–248, § 238(d)(4)(C), amend- ed subpar. (C) generally, striking out cl. ‘‘(i)’’ designa- tion and cl. (ii) which related to taking into account compensation in excess of $100,000 with respect to a simplified employee pension. Subsec. (k)(6). Pub. L. 97–248, § 238(d)(4)(A), struck out par. (6) which related to prohibition on employer main- taining plan to which section 401(j) applies. Subsecs. (n), (o). Pub. L. 97–248, § 237(e)(3)(B), added subsec. (n) and redesignated former subsec. (n) as (o). 1981—Subsec. (a)(1). Pub. L. 97–34, § 313(b)(2), inserted reference to section 405(d)(3). Pub. L. 97–34, § 311(g)(1)(A), substituted ‘‘$2,000’’ for ‘‘$1,500’’. Subsec. (b). Pub. L. 97–34, § 311(g)(1)(B), substituted in par. (2)(B) and provision following par. (5) ‘‘$2,000’’ for ‘‘$1,500’’. Subsec. (d)(4). Pub. L. 97–34, § 311(h)(2), substituted section ‘‘219’’ for ‘‘219 or 220’’ in provision preceding subpar. (A) and in subpar. (B). Subsec. (d)(5)(A). Pub. L. 97–34, § 312(c)(5), substituted ‘‘$15,000’’ for ‘‘$7,500’’. Pub. L. 97–34, § 311(g)(2), (h)(2), substituted ‘‘$2,250’’ for ‘‘$1,750’’ and ‘‘219’’ for ‘‘219 or 220’’ in two places. Subsec. (j). Pub. L. 97–34, § 312(c)(5), substituted ‘‘$15,000’’ for ‘‘$7,500’’. Pub. L. 97–34, § 311(g)(1)(C), substituted ‘‘$2,000’’ for ‘‘$1,500’’. Subsec. (k)(3)(C). Pub. L. 97–34, § 312(b)(2), designated provision relating to compensation bearing a uniform relationship to total compensation as cl. (i), and in cl. (i) as so designated, substituted ‘‘$200,000’’ for ‘‘$100,000’’, and added cl. (ii). Subsecs. (m), (n). Pub. L. 97–34, § 314(b)(1), as amended by Pub. L. 97–448, § 103(e)(1), added subsec. (m) and re- designated former subsec. (m) as (n). 1980—Subsec. (a)(1). Pub. L. 96–222, § 101(a)(14)(B), in- serted reference to section 402(a)(7). Subsec. (d)(5). Pub. L. 96–222, § 101(a)(10)(C), (14)(E)(ii), in subpar. (A) inserted provisions requiring that if em- ployer contributions on behalf of the individual are paid for the taxable year to a simplified employee pen- sion, the dollar amount of the preceding sentence be in- creased by the lessor of the amount of such contribu- tions or $7,500 and restructured subpar. (B). Subsec. (j)(3). Pub. L. 96–222, § 101(a)(10)(J)(i), struck out par. (3) which made reference to paragraph (5) of subsection (b). Subsec. (k). Pub. L. 96–222, § 101(a)(10)(A), (F), (G), substituted in par. (1) ‘‘(5), and (6)’’ for ‘‘and (5)’’ and in par. (3)(D) ‘‘If the employer does not maintain an inte- grated plan at any time during the taxable year, taxes paid’’ for ‘‘Taxes paid’’, inserted in par. (2) provisions requiring that for purposes of this paragraph there be excluded from consideration employees described in subparagraph (A) or (C) of section 410(b)(2) and pars. (3)(E) and (6), and redesignated former par. (6) as (7). Subsec. (k)(2), (3)(B)(i). Pub. L. 96–605, § 225(b)(3), (4), substituted ‘‘section 410(b)(3)’’ for ‘‘section 410(b)(2)’’. 1978—Subsec. (a)(1). Pub. L. 95–600, § 156(c)(3), inserted reference to section 403(b)(8). Subsec. (b)(2). Pub. L. 95–600, § 157(d)(1), (e)(1)(A), des- ignated existing provisions as subpars. (B) and (C) and added subpar. (A), and in subpar. (B) as so designated, inserted ‘‘on behalf of any individual’’ after ‘‘annual premium’’, respectively. Subsec. (d)(3)(A)(iii). Pub. L. 95–600, § 156(c)(1), added cl. (iii). Subsec. (d)(3)(B). Pub. L. 95–600, § 157(g)(3), (h)(2), in- serted provision relating to the applicability of clause (ii) of subparagraph (A) to any amount paid or distrib- uted out of an individual retirement account or annu- ity to which an amount was contributed which was treated as a rollover contribution by section 402(a)(7) and substituted ‘‘1-year period’’ for ‘‘3-year period’’. Subsec. (d)(4). Pub. L. 95–600, § 703(c)(4), amended Pub. L. 94–455, § 1501(b)(5). See 1976 Amendment note below. Subsec. (d)(5), (6). Pub. L. 95–600, § 157(c)(1), added par. (5) and redesignated former par. (5) as (6). Subsecs. (j) to (m). Pub. L. 95–600, § 152(a), added sub- secs. (j) to (l) and redesignated former subsec. (j) as (m). 1976—Subsecs. (a)(2), (6), (b). Pub. L. 94–455, § 1906(b)(13)(A), struck out ‘‘or his delegate’’ after ‘‘Sec- retary’’. Subsec. (c)(2). Pub. L. 94–455, § 1501(b)(2), substituted ‘‘member (or spouse of an employee or member)’’ for ‘‘member’’. Subsec. (d)(1). Pub. L. 94–455, § 1501(b)(10), substituted ‘‘Notwithstanding any other provision of this title (in- cluding chapters 11 and 12), the basis’’ for ‘‘The basis’’. Subsec. (d)(4). Pub. L. 94–455, § 1501(b)(5), as amended by Pub. L. 95–600, § 703(c)(4), inserted reference to sec- tion 220 and substituted ‘‘In the case of such a distribu- tion, for purposes of section 61, any net income de- scribed in subparagraph (C) shall be deemed to have been earned and receivable in the taxable year in which such excess contribution is made’’ for ‘‘Any net income described in subparagraph (C) shall be included in the gross income of the individual for the taxable year in which received’’. Subsecs. (h), (i). Pub. L. 94–455, § 1906(b)(13)(A), struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2022 AMENDMENT Amendment by section 107(d) of Pub. L. 117–328 appli- cable to distributions required to be made after Dec. 31, 2022, with respect to individuals who attain age 72 after such date, see section 107(e) of Pub. L. 117–328, set out as a note under section 401 of this title. Amendment by section 110(d) of Pub. L. 117–328 appli- cable to contributions made for plan years beginning after Dec. 31, 2023, see section 110(h) of Pub. L. 117–328, set out as a note under section 401 of this title. Amendment by section 116(a), (b)(1) of Pub. L. 117–328 applicable to taxable years beginning after Dec. 31, 2023, see section 116(c) of Pub. L. 117–328, set out as a note under section 401 of this title. Page 1327 TITLE 26—INTERNAL REVENUE CODE § 408 Amendment by section 117(a), (c)–(f) of Pub. L. 117–328 applicable to taxable years beginning after Dec. 31, 2023, see section 117(h) of Pub. L. 117–328, set out as a note under section 401 of this title. Pub. L. 117–328, div. T, title III, § 307(c), Dec. 29, 2022, 136 Stat. 5345, provided that: ‘‘The amendment made by this section [amending this section] shall apply to dis- tributions made in taxable years beginning after the date of the enactment of this Act [Dec. 29, 2022].’’ Pub. L. 117–328, div. T, title III, § 322(b), Dec. 29, 2022, 136 Stat. 5356, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending 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 the Internal Revenue Code of 1986 of individual retirement plans as 1 contract in the case of any other provision of such Code to which the amendments made by this section do not apply.’’ Amendment by section 332(a), (b)(2) of Pub. L. 117–328 applicable to plan years beginning after Dec. 31, 2023, see section 332(c) of Pub. L. 117–328, set out as a note under section 72 of this title. Amendment by section 401(b)(4) of Pub. L. 117–328 ef- fective as if included in the section of div. O of Pub. L. 116–94 to which the amendment relates, see section 401(c) of Pub. L. 117–328, set out as a note under section 72 of this title. Amendment by section 601(b)(3), (c)(1) of Pub. L. 117–328 applicable to taxable years beginning after Dec. 31, 2022, see section 601(e) of Pub. L. 117–328, set out as a note under section 402 of this title. EFFECTIVE DATE OF 2019 AMENDMENT Pub. L. 116–94, div. O, title I, § 101(e), Dec. 20, 2019, 133 Stat. 3145, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section, section 413 of this title, and sections 1002, 1023, 1024, and 1112 of Title 29, Labor] shall apply to plan years beginning after December 31, 2020. ‘‘(2) RULE OF CONSTRUCTION.—Nothing in the amend- ments made by subsection (a) [amending this section and section 413 of this title] shall be construed as lim- iting the authority of the Secretary of the Treasury or the Secretary’s delegate (determined without regard to such amendment) to provide for the proper treatment of a failure to meet any requirement applicable under the Internal Revenue Code of 1986 with respect to one employer (and its employees) in a multiple employer plan.’’ Amendment by section 107(b) of Pub. L. 116–94 appli- cable to distributions made for taxable years beginning after Dec. 31, 2019, see section 107(d)(2) of Pub. L. 116–94, set out in a note under section 219 of this title. Amendment by section 114(c) of Pub. L. 116–94 appli- cable to distributions required to be made after Dec. 31, 2019, with respect to individuals who attain age 701⁄2 after such date, see section 114(d) of Pub. L. 116–94, set out as a note under section 401 of this title. Pub. L. 116–94, div. O, title I, § 116(a)(2), Dec. 20, 2019, 133 Stat. 3161, provided that: ‘‘The amendments made by this subsection [amending this section] shall apply to contributions after the date of the enactment of this Act [Dec. 20, 2019].’’ EFFECTIVE DATE OF 2017 AMENDMENT Amendment by Pub. L. 115–97 applicable to any di- vorce or separation instrument (as defined in former section 71(b)(2) of this title as in effect before Dec. 22, 2017) executed after Dec. 31, 2018, and to such instru- ments executed on or before Dec. 31, 2018, and modified after Dec. 31, 2018, if the modification expressly pro- vides that the amendment made by section 11051 of Pub. L. 115–97 applies to such modification, see section 11051(c) of Pub. L. 115–97, set out as a note under section 61 of this title. EFFECTIVE DATE OF 2015 AMENDMENT Pub. L. 114–113, div. Q, title I, § 112(b), Dec. 18, 2015, 129 Stat. 3047, provided that: ‘‘The amendment made by this section [amending this section] shall apply to dis- tributions made in taxable years beginning after De- cember 31, 2014.’’ Pub. L. 114–113, div. Q, title III, § 306(b), Dec. 18, 2015, 129 Stat. 3089, provided that: ‘‘The amendments made by this section [amending this section] shall apply to contributions made after the date of the enactment of this Act [Dec. 18, 2015].’’ EFFECTIVE DATE OF 2014 AMENDMENT Pub. L. 113–295, div. A, title I, § 108(b), Dec. 19, 2014, 128 Stat. 4014, provided that: ‘‘The amendment made by this section [amending this section] shall apply to dis- tributions made in taxable years beginning after De- cember 31, 2013.’’ Amendment by section 221(a)(53) of Pub. L. 113–295 ef- fective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title. EFFECTIVE DATE OF 2013 AMENDMENT Pub. L. 112–240, title II, § 208(b), Jan. 2, 2013, 126 Stat. 2324, provided that: ‘‘(1) EFFECTIVE DATE.—The amendment made by this section [amending this section] shall apply to distribu- tions made in taxable years beginning after December 31, 2011. ‘‘(2) SPECIAL RULES.—For purposes of subsections (a)(6), (b)(3), and (d)(8) of section 408 of the Internal Revenue Code of 1986, at the election of the taxpayer (at such time and in such manner as prescribed by the Secretary of the Treasury)— ‘‘(A) any qualified charitable distribution made after December 31, 2012, and before February 1, 2013, shall be deemed to have been made on December 31, 2012, and ‘‘(B) any portion of a distribution from an indi- vidual retirement account to the taxpayer after No- vember 30, 2012, and before January 1, 2013, may be treated as a qualified charitable distribution to the extent that— ‘‘(i) such portion is transferred in cash after the distribution to an organization described in section 408(d)(8)(B)(i) before February 1, 2013, and ‘‘(ii) such portion is part of a distribution that would meet the requirements of section 408(d)(8) but for the fact that the distribution was not trans- ferred directly to an organization described in sec- tion 408(d)(8)(B)(i).’’ EFFECTIVE DATE OF 2010 AMENDMENT Pub. L. 111–312, title VII, § 725(b), Dec. 17, 2010, 124 Stat. 3316, provided that: ‘‘(1) EFFECTIVE DATE.—The amendment made by this section [amending this section] shall apply to distribu- tions made in taxable years beginning after December 31, 2009. ‘‘(2) SPECIAL RULE.—For purposes of subsections (a)(6), (b)(3), and (d)(8) of section 408 of the Internal Revenue Code of 1986, at the election of the taxpayer (at such time and in such manner as prescribed by the Secretary of the Treasury) any qualified charitable dis- tribution made after December 31, 2010, and before Feb- ruary 1, 2011, shall be deemed to have been made on De- cember 31, 2010.’’ EFFECTIVE DATE OF 2008 AMENDMENT Pub. L. 110–343, div. C, title II, § 205(b), Oct. 3, 2008, 122 Stat. 3865, provided that: ‘‘The amendment made by this section [amending this section] shall apply to dis- tributions made in taxable years beginning after De- cember 31, 2007.’’ EFFECTIVE DATE OF 2007 AMENDMENT Amendment by Pub. L. 110–172 effective as if included in the provisions of the Pension Protection Act of 2006, Page 1328 TITLE 26—INTERNAL REVENUE CODE § 408 Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title. EFFECTIVE DATE OF 2006 AMENDMENT Amendment by Pub. L. 109–432 applicable to taxable years beginning after Dec. 31, 2006, see section 307(c) of Pub. L. 109–432, set out as a note under section 223 of this title. Pub. L. 109–280, title XII, § 1201(c)(1), Aug. 17, 2006, 120 Stat. 1066, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to distributions made in taxable years beginning after De- cember 31, 2005.’’ EFFECTIVE DATE OF 2004 AMENDMENT Amendment by section 404(d) of Pub. L. 108–311 effec- tive as if included in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, 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 2002 AMENDMENT Amendment by Pub. L. 107–147 effective as if included in the provisions of the Economic Growth and Tax Re- lief Reconciliation Act of 2001, Pub. L. 107–16, to which such amendment relates, see section 411(x) of Pub. L. 107–147, set out as a note under section 25B of this title. EFFECTIVE DATE OF 2001 AMENDMENT Amendment by section 601(b) of Pub. L. 107–16 appli- cable to taxable years beginning after Dec. 31, 2001, see section 601(c) of Pub. L. 107–16, set out as a note under section 219 of this title. Pub. L. 107–16, title VI, § 602(c), June 7, 2001, 115 Stat. 96, provided that: ‘‘The amendments made by this sec- tion [amending this section and section 1003 of Title 29, Labor] shall apply to plan years beginning after Decem- ber 31, 2002.’’ Amendment by section 611(c)(1), (f)(1), (2), (g)(2) of Pub. L. 107–16 applicable to years beginning after Dec. 31, 2001, see section 611(i)(1) of Pub. L. 107–16, set out as a note under section 415 of this title. Amendment by section 641(e)(8) of Pub. L. 107–16 ap- plicable to distributions after Dec. 31, 2001, see section 641(f)(1) of Pub. L. 107–16, set out as a note under sec- tion 402 of this title. Pub. L. 107–16, title VI, § 642(c), June 7, 2001, 115 Stat. 122, provided that: ‘‘(1) EFFECTIVE DATE.—The amendments made by this section [amending this section and section 403 of this title] shall apply to distributions after December 31, 2001. ‘‘(2) SPECIAL RULE.—Notwithstanding any other provi- sion of law, subsections (h)(3) and (h)(5) of section 1122 of the Tax Reform Act of 1986 [Pub. L. 99–514, set out as a note under section 402 of this title] shall not apply to any distribution from an eligible retirement plan (as defined in clause (iii) or (iv) of section 402(c)(8)(B) of the Internal Revenue Code of 1986) on behalf of an indi- vidual if there was a rollover to such plan on behalf of such individual which is permitted solely by reason of the amendments made by this section.’’ Amendment by section 643(c) of Pub. L. 107–16 appli- cable to distributions made after Dec. 31, 2001, see sec- tion 643(d) of Pub. L. 107–16, set out as a note under sec- tion 401 of this title. Amendment by section 644(b) of Pub. L. 107–16 appli- cable to distributions after Dec. 31, 2001, see section 644(c) of Pub. L. 107–16, set out as a note under section 402 of this title. EFFECTIVE DATE OF 1998 AMENDMENT Amendment by section 6018(b) of Pub. L. 105–206 effec- tive as if included in the provisions of the Small Busi- ness Job Protection Act of 1996, Pub. L. 104–188, to which such amendment relates, see section 6018(h) of Pub. L. 105–206, set out as a note under section 23 of this title. Amendment by sections 6015(a) and 6016(a)(1) of Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1997 AMENDMENT Amendment by section 302(d) of Pub. L. 105–34 appli- cable to taxable years beginning after Dec. 31, 1997, see section 302(f) of Pub. L. 105–34, set out as a note under section 219 of this title. Pub. L. 105–34, title III, § 304(b), Aug. 5, 1997, 111 Stat. 831, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to taxable years beginning after December 31, 1997.’’ Pub. L. 105–34, title XV, § 1501(c)(2), Aug. 5, 1997, 111 Stat. 1058, provided that: ‘‘The amendment made by subsection (b) [amending this section] shall apply to years beginning after December 31, 1996.’’ Amendment by section 1601(d)(1)(A)–(C)(i), (D)–(G) of Pub. L. 105–34 effective as if included in the provisions of the Small Business Job Protection Act of 1996, Pub. L. 104–188, to which it relates, see section 1601(j) of Pub. L. 105–34, set out as a note under section 23 of this title. EFFECTIVE DATE OF 1996 AMENDMENT Amendment by section 1421(a), (b)(3)(B), (5), (6), (c) of 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. Amendment by section 1427(b)(3) of Pub. L. 104–188 ap- plicable to taxable years beginning after Dec. 31, 1996, see section 1427(c) of Pub. L. 104–188, set out as a note under section 219 of this title. Amendment by section 1431(c)(1)(B) of Pub. L. 104–188 applicable to years beginning after Dec. 31, 1996, except that in determining whether an employee is a highly compensated employee for years beginning in 1997, such amendment to be treated as having been in effect for years beginning in 1996, see section 1431(d)(1) of Pub. L. 104–188, set out as a note under section 414 of this title. Pub. L. 104–188, title I, § 1455(e), Aug. 20, 1996, 110 Stat. 1818, provided that: ‘‘The amendments made by this section [amending this section and sections 6047, 6652, 6693, and 6724 of this title] shall apply to returns, re- ports, and other statements the due date for which (de- termined without regard to extensions) is after Decem- ber 31, 1996.’’ EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103–465 applicable to years be- ginning after Dec. 31, 1994, and, to the extent of pro- viding for the rounding of indexed amounts, not appli- cable to any year to the extent the rounding would re- quire the indexed amount to be reduced below the amount in effect for years beginning in 1994, see section 732(e) of Pub. L. 103–465, set out as a note under section 401 of this title. EFFECTIVE DATE OF 1993 AMENDMENT Amendment by Pub. L. 103–66 applicable, except as otherwise provided, to benefits accruing in plan years beginning after Dec. 31, 1993, see section 13212(d) of Pub. L. 103–66, set out as a note under section 401 of this title. EFFECTIVE DATE OF 1992 AMENDMENT Amendment by Pub. L. 102–318 applicable to distribu- tions after Dec. 31, 1992, see section 521(e) of Pub. L. 102–318, set out as a note under section 402 of this title. EFFECTIVE DATE OF 1989 AMENDMENT Amendment by section 7811(m)(7) of Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Rev- enue Act of 1988, Pub. L. 100–647, to which such amend- ment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title. Page 1329 TITLE 26—INTERNAL REVENUE CODE § 408 Pub. L. 101–239, title VII, § 7841(a)(3), Dec. 19, 1989, 103 Stat. 2428, provided that: ‘‘The amendments made by this subsection [amending this section and section 414 of this title] shall apply to transfers after the date of the enactment of this Act [Dec. 19, 1989] in taxable years ending after such date.’’ EFFECTIVE DATE OF 1988 AMENDMENT Amendment by section 1011(c)(7)(C) of Pub. L. 100–647 applicable to plan years beginning after Dec. 31, 1987, with exception in case of a plan described in section 1105(c)(2) of Pub. L. 99–514, see section 1011(c)(7)(E) of Pub. L. 100–647, set out as a note under section 401 of this title. Pub. L. 100–647, title I, § 1011A(a)(2)(B), Nov. 10, 1988, 102 Stat. 3472, provided that: ‘‘The amendment made by subparagraph (A) [amending this section] shall apply to rollover contributions made in taxable years beginning after December 31, 1986.’’ Amendment by sections 1011(b)(1)–(3), (f)(1)–(5), (10), (i)(5) and 1018(t)(3)(D) 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. Pub. L. 100–647, title VI, § 6057(b), Nov. 10, 1988, 102 Stat. 3698, provided that: ‘‘The amendments made by subsection (a) [amending this section] shall apply to acquisitions after the date of the enactment of this Act [Nov. 10, 1988].’’ EFFECTIVE DATE OF 1986 AMENDMENT Amendment by section 1102(a), (b)(2), (c), (e)(2) of Pub. L. 99–514 applicable to contributions and distribu- tions for taxable years beginning after Dec. 31, 1986, see section 1102(g) of Pub. L. 99–514, set out as a note under section 219 of this title. Amendment by section 1108(a), (d)–(g)(1), (4), (6) of Pub. L. 99–514 applicable to years beginning after Dec. 31, 1986, except that section 408(k)(3)(D) and (E) of the Internal Revenue Code of 1954 (as in effect before the amendments made by section 1108 of Pub. L. 99–514) shall continue to apply for years beginning after Dec. 31, 1986, and before Jan. 1, 1989, except that employer contributions under an arrangement under section 408(k)(6) of the Internal Revenue Code of 1986 (as added by section 1108 of Pub. L. 99–514) may not be integrated under section 408(k)(3)(D) and (E) of the Internal Rev- enue Code of 1954, see section 1108(h) of Pub. L. 99–514, as amended, set out as a note under section 219 of this title. Amendment by section 1121(c)(2) of Pub. L. 99–514 ap- plicable to years beginning after Dec. 31, 1986, with spe- cial provisions for plans maintained pursuant to collec- tive 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 1122(e)(2)(B) of Pub. L. 99–514 applicable, except as otherwise provided, to amounts distributed after Dec. 31, 1986, in taxable years ending after such date, see section 1122(h) of Pub. L. 99–514, set out as a note under section 402 of this title. Amendment by section 1123(d)(2) of Pub. L. 99–514 ap- plicable to taxable years beginning after Dec. 31, 1986, except as otherwise provided, see section 1123(e) of Pub. L. 99–514, set out as a note under section 72 of this title. Pub. L. 99–514, title XI, § 1144(b), Oct. 22, 1986, 100 Stat. 2490, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to acquisitions after December 31, 1986.’’ Amendment by sections 1852(a)(1), (5)(C), (7)(A) and 1875(c)(8) of Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Re- form 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. Amendment by section 1875(c)(6)(A) of Pub. L. 99–514 effective as if included in the amendments made by sec- tion 238 of Pub. L. 97–248, see section 1875(c)(12) of Pub. L. 99–514, set out as a note under section 62 of this title. Pub. L. 99–514, title XVIII, § 1898(a)(5), Oct. 22, 1986, 100 Stat. 2944, provided that the amendment made by that section is effective with respect to plan years beginning after Oct. 22, 1986. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by section 147(a) of Pub. L. 98–369 appli- cable to contributions made after Dec. 31, 1984, see sec- tion 147(d)(1) of Pub. L. 98–369, set out as a note under section 219 of this title. Amendment by section 491(d)(19)–(24) of Pub. L. 98–369 applicable to obligations issued after Dec. 31, 1983, see section 491(f)(1) of Pub. L. 98–369, set out as a note under section 62 of this title. Amendment by section 521(b) of Pub. L. 98–369 appli- cable to years beginning after Dec. 31, 1984, see section 521(e) of Pub. L. 98–369, set out as a note under section 401 of this title. Amendment by section 522(d)(12) of Pub. L. 98–369 ap- plicable to distributions made after July 18, 1984, in taxable years ending after that date, see section 522(e) of Pub. L. 98–369, set out as a note under section 402 of this title. Amendment by section 713 of Pub. L. 98–369 effective as if included in the provision of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97–248, to which such amendment relates, see section 715 of Pub. L. 98–369, set out as a note under section 31 of this title. EFFECTIVE DATE OF 1983 AMENDMENT Amendment by Pub. L. 97–448 effective, except as oth- erwise provided, as if it had been included in the provi- sion of the Economic Recovery Tax Act of 1981, Pub. L. 97–34, to which such amendment relates, see section 109 of Pub. L. 97–448, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1982 AMENDMENT Amendment by sections 237 and 238 of Pub. L. 97–248 applicable to years beginning after Dec. 31, 1983, see section 241 of Pub. L. 97–248, set out as an Effective Date note under section 416 of this title. Pub. L. 97–248, title II, § 243(c), Sept. 3, 1982, 96 Stat. 523, as amended by Pub. L. 98–369, div. A, title VII, § 713(g)(1), July 18, 1984, 98 Stat. 960, provided that: ‘‘The amendments made by this section [amending this sec- tion and sections 219 and 409 of this title] shall apply with respect to individuals dying after December 31, 1983.’’ Pub. L. 97–248, title III, § 335(b), Sept. 3, 1982, 96 Stat. 628, provided that: ‘‘The amendments made by sub- section (a) [amending this section and section 409 of this title] shall apply to distributions made after De- cember 31, 1982, in taxable years ending after such date.’’ EFFECTIVE DATE OF 1981 AMENDMENT Amendment by section 311(g)(1)(A)–(C), (2), (h)(2) of Pub. L. 97–34 applicable to taxable years beginning after Dec. 31, 1981, see section 311(i) of Pub. L. 97–34, set out as a note under section 219 of this title. Amendment by section 312(b)(2), (c)(5) of Pub. L. 97–34 applicable to plans which include employees within the meaning of section 401(c)(1) with respect to taxable years beginning after Dec. 31, 1981, see section 312(f) of Pub. L. 97–34, set out as a note under section 72 of this title. Amendment by section 313(b)(2) of Pub. L. 97–34 appli- cable to redemptions after Aug. 13, 1981, in taxable years ending after such date, see section 313(c) of Pub. L. 97–34, set out as a note under section 219 of this title. Pub. L. 97–34, title III, § 314(b)(2), Aug. 13, 1981, 95 Stat. 286, provided that: ‘‘The amendment made by paragraph (1) [amending this section] shall apply to property acquired after December 31, 1981, in taxable years ending after such date.’’ EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96–605 applicable with respect to plan years beginning after Dec. 31, 1980, see section Page 1330 TITLE 26—INTERNAL REVENUE CODE § 408 225(c) of Pub. L. 96–605, set out as a note under section 401 of this title. Amendment by Pub. L. 96–222 effective, except as oth- erwise provided, as if it had been included in the provi- sions of the Revenue Act of 1978, Pub. L. 95–600, to which such amendment relates, see section 201 of Pub. L. 96–222, set out as a note under section 32 of this title. EFFECTIVE DATE OF 1978 AMENDMENT Pub. L. 95–600, title I, § 152(h), Nov. 6, 1978, 92 Stat. 2800, provided that: ‘‘The amendments made by this section [amending this section and sections 219, 401, 404, 414, and 415 of this title] shall apply to taxable years beginning after December 31, 1978.’’ Amendment by section 156(c)(1), (3) of Pub. L. 95–600 applicable to distributions or transfers made after Dec. 31, 1977, in taxable years beginning after such date, see section 156(d) of Pub. L. 95–600, set out as a note under section 403 of this title. Pub. L. 95–600, title I, § 157(c)(2)(A), Nov. 6, 1978, 92 Stat. 2805, provided that: ‘‘The amendments made by paragraph (1) [amending this section] shall apply to distributions in taxable years beginning after Decem- ber 31, 1975.’’ Pub. L. 95–600, title I, § 157(d)(2), Nov. 6, 1978, 92 Stat. 2806, provided that: ‘‘The amendment made by para- graph (1) [amending this section] shall apply to con- tracts issued after the date of the enactment of this Act [Nov. 6, 1978].’’ Amendment by section 157(h)(2) of Pub. L. 95–600 ap- plicable to payments made in taxable years beginning after Dec. 31, 1977, see section 157(h)(3)(A) of Pub. L. 95–600, set out as a note under section 402 of this title. Pub. L. 95–600, title I, § 157(e)(2), Nov. 6, 1978, 92 Stat. 2806, provided that: ‘‘The amendments made by para- graph (1) [amending this section and section 409 of this title] shall apply to taxable years beginning after De- cember 31, 1976.’’ Amendment by section 157(g)(3) of Pub. L. 95–600 ap- plicable to lump-sum distributions completed after Dec. 31, 1978, in taxable years ending after such date, see section 157(g)(4) of Pub. L. 95–600, set out as a note under section 402 of this title. Amendment by section 703(c)(4) of Pub. L. 95–600 ap- plicable to taxable years beginning after Dec. 31, 1976, see section 703(c)(5) of Pub. L. 95–600, set out as a note under section 219 of this title. EFFECTIVE DATE OF 1976 AMENDMENT Amendment by section 1501(b)(2), (5), (10) of Pub. L. 94–455 effective for taxable years beginning after Dec. 31, 1976, see section 1501(d) of Pub. L. 94–455, set out as a note under section 62 of this title. EFFECTIVE DATE Section applicable to taxable years beginning after Dec. 31, 1974, see section 2002(i)(1) of Pub. L. 93–406, set out as a note under section 219 of this title. TREASURY GUIDANCE ON ROLLOVERS Pub. L. 117–328, div. T, title III, § 324, Dec. 29, 2022, 136 Stat. 5358, provided that: ‘‘(a) IN GENERAL.—Not later than January 1, 2025, the Secretary of the Treasury or the Secretary’s delegate shall, to simplify, standardize, facilitate, and expedite the completion of rollovers to eligible retirement plans (as defined in section 402(c)(8)(B) of the Internal Rev- enue Code of 1986) and trustee-to-trustee transfers from individual retirement plans (as defined in section 7701(a)(37) of such Code), develop and issue— ‘‘(1) guidance in the form of sample forms (includ- ing relevant procedures and protocols) for rollovers of eligible rollover distributions from a retirement to an eligible retirement plan which— ‘‘(A) are written in a manner calculated to be un- derstood by the average person, and ‘‘(B) can be used by both distributing eligible re- tirement plans and receiving retirement plans, and ‘‘(2) guidance in the form of sample forms (includ- ing relevant procedures and protocols) for trustee-to- trustee transfers of amounts from an individual re- tirement plan to another individual retirement plan which— ‘‘(A) are written in a manner calculated to be un- derstood by the average person, and ‘‘(B) can be used by both transferring individual retirement plans and individual retirement plans receiving the transfer. ‘‘(b) OTHER REQUIREMENTS.—In developing the sample forms under subsection (a), the Secretary (or Sec- retary’s delegate) shall obtain relevant information from participants and plan sponsor representatives and consider potential coordination with sections 319 and 336 of this Act [div. T of Pub. L. 117–328; 136 Stat. 5353, 5373].’’ ROLLOVER OF AMOUNTS RECEIVED IN AIRLINE CARRIER BANKRUPTCY Pub. L. 112–95, title XI, § 1106, Feb. 14, 2012, 126 Stat. 152, as amended by Pub. L. 113–243, § 1, Dec. 18, 2014, 128 Stat. 2863; Pub. L. 114–113, div. Q, title III, § 307(a), Dec. 18, 2015, 129 Stat. 3089, provided that: ‘‘(a) GENERAL RULES.— ‘‘(1) ROLLOVER OF AIRLINE PAYMENT AMOUNT.—If a qualified airline employee receives any airline pay- ment amount and transfers any portion of such amount to a traditional IRA within 180 days of re- ceipt of such amount (or, if later, within 180 days of the date of the enactment of this Act [Feb. 14, 2012]), then such amount (to the extent so transferred) shall be treated as a rollover contribution described in sec- tion 402(c) of the Internal Revenue Code of 1986. A qualified airline employee making such a transfer may exclude from gross income the amount trans- ferred, in the taxable year in which the airline pay- ment amount was paid to the qualified airline em- ployee by the commercial passenger airline carrier. ‘‘(2) TRANSFER OF AMOUNTS ATTRIBUTABLE TO AIR- LINE PAYMENT AMOUNT FOLLOWING ROLLOVER TO ROTH IRA.—A qualified airline employee who has contrib- uted an airline payment amount to a Roth IRA that is treated as a qualified rollover contribution pursu- ant to section 125 of the Worker, Retiree, and Em- ployer Recovery Act of 2008 [Pub. L. 110–458, 26 U.S.C. 408A note], may transfer to a traditional IRA, in a trustee-to-trustee transfer, all or any part of the con- tribution (together with any net income allocable to such contribution), and the transfer to the tradi- tional IRA will be deemed to have been made at the time of the rollover to the Roth IRA, if such transfer is made within 180 days of the date of the enactment of this Act. A qualified airline employee making such a transfer may exclude from gross income the airline payment amount previously rolled over to the Roth IRA, to the extent an amount attributable to the pre- vious rollover was transferred to a traditional IRA, in the taxable year in which the airline payment amount was paid to the qualified airline employee by the commercial passenger airline carrier. No amount so transferred to a traditional IRA may be treated as a qualified rollover contribution with respect to a Roth IRA within the 5-taxable year period beginning with the taxable year in which such transfer was made. ‘‘(3) EXTENSION OF TIME TO FILE CLAIM FOR REFUND.— A qualified airline employee who excludes an amount from gross income in a prior taxable year under para- graph (1) or (2) may reflect such exclusion in a claim for refund filed within the period of limitation under section 6511(a) of such Code (or, if later, April 15, 2015). ‘‘(4) OVERALL LIMITATION ON AMOUNTS TRANSFERRED TO TRADITIONAL IRAS.— ‘‘(A) IN GENERAL.—The aggregate amount of air- line payment amounts which may be transferred to 1 or more traditional IRAs under paragraphs (1) and (2) with respect to any qualified employee for any taxable year shall not exceed the excess (if any) of— ‘‘(i) 90 percent of the aggregate airline payment amounts received by the qualified airline em- Page 1331 TITLE 26—INTERNAL REVENUE CODE § 408 ployee during the taxable year and all preceding taxable years, over ‘‘(ii) the aggregate amount of such transfers to which paragraphs (1) and (2) applied for all pre- ceding taxable years. ‘‘(B) SPECIAL RULES.—For purposes of applying the limitation under subparagraph (A)— ‘‘(i) any airline payment amount received by the surviving spouse of any qualified employee, and any amount transferred to a traditional IRA by such spouse under subsection (d), shall be treated as an amount received or transferred by the qualified employee, and ‘‘(ii) any amount transferred to a traditional IRA which is attributable to net income described in paragraph (2) shall not be taken into account. ‘‘(5) COVERED EXECUTIVES NOT ELIGIBLE TO MAKE TRANSFERS.—Paragraphs (1) and (2) shall not apply to any transfer by a qualified airline employee (or any transfer authorized under subsection (d) by a sur- viving spouse of the qualified airline employee) if at any time during the taxable year of the transfer or any preceding taxable year the qualified airline em- ployee held a position described in subparagraph (A) or (B) of section 162(m)(3) [probably means section 162(m)(3) of the Internal Revenue Code of 1986] with the commercial passenger airline carrier from whom the airline payment amount was received. ‘‘(6) SPECIAL RULE FOR CERTAIN AIRLINE PAYMENT AMOUNTS.—In the case of any amount which became an airline payment amount by reason of the amend- ments made by section 1(b) of Public Law 113–243 (26 U.S.C. 408 note), paragraph (1) shall be applied by sub- stituting ‘(or, if later, within the period beginning on December 18, 2014, and ending on the date which is 180 days after the date of enactment of the Protecting Americans from Tax Hikes Act of 2015 [Dec. 18, 2015])’ for ‘(or, if later, within 180 days of the date of the en- actment of this Act [Feb. 14, 2012])’. ‘‘(b) TREATMENT OF AIRLINE PAYMENT AMOUNTS AND TRANSFERS FOR EMPLOYMENT TAXES.—For purposes of chapter 21 of the Internal Revenue Code of 1986 and sec- tion 209 of the Social Security Act [42 U.S.C. 409], an airline payment amount shall not fail to be treated as a payment of wages by the commercial passenger air- line carrier to the qualified airline employee in the tax- able year of payment because such amount is excluded from the qualified airline employee’s gross income under subsection (a). ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this section— ‘‘(1) AIRLINE PAYMENT AMOUNT.— ‘‘(A) IN GENERAL.—The term ‘airline payment amount’ means any payment of any money or other property which is payable by a commercial pas- senger airline carrier to a qualified airline em- ployee— ‘‘(i) under the approval of an order of a Federal bankruptcy court in a case filed after September 11, 2001, and before January 1, 2007, or filed on No- vember 29, 2011, and ‘‘(ii) in respect of the qualified airline employ- ee’s interest in a bankruptcy claim against the carrier, any note of the carrier (or amount paid in lieu of a note being issued), or any other fixed ob- ligation of the carrier to pay a lump sum amount. The amount of such payment shall be determined without regard to any requirement to deduct and withhold tax from such payment under sections 3102(a) of the Internal Revenue Code of 1986 and 3402(a) of such Code. ‘‘(B) EXCEPTION.—An airline payment amount shall not include any amount payable on the basis of the carrier’s future earnings or profits. ‘‘(2) QUALIFIED AIRLINE EMPLOYEE.—The term ‘quali- fied airline employee’ means an employee or former employee of a commercial passenger airline carrier who was a participant in a defined benefit plan main- tained by the carrier which— ‘‘(A) is a plan described in section 401(a) of the In- ternal Revenue Code of 1986 which includes a trust exempt from tax under section 501(a) of such Code, and ‘‘(B) was terminated, became subject to the re- strictions contained in paragraphs (2) and (3) of sec- tion 402(b) of the Pension Protection Act of 2006 [Pub. L. 109–280, 26 U.S.C. 430 note], or was frozen ef- fective November 1, 2012. ‘‘(3) TRADITIONAL IRA.—The term ‘traditional IRA’ means an individual retirement plan (as defined in section 7701(a)(37) of the Internal Revenue Code of 1986) which is not a Roth IRA. ‘‘(4) ROTH IRA.—The term ‘Roth IRA’ has the mean- ing given such term by section 408A(b) of such Code. ‘‘(d) SURVIVING SPOUSE.—If a qualified airline em- ployee died after receiving an airline payment amount, or if an airline payment amount was paid to the sur- viving spouse of a qualified airline employee in respect of the qualified airline employee, the surviving spouse of the qualified airline employee may take all actions permitted under section 125 of the Worker, Retiree and Employer Recovery Act of 2008 [Pub. L. 110–458, 26 U.S.C. 408A note], or under this section, to the same ex- tent that the qualified airline employee could have done had the qualified airline employee survived. ‘‘(e) EFFECTIVE DATE.—This section shall apply to transfers made after the date of the enactment of this Act [Feb. 14, 2012] with respect to airline payment amounts paid before, on, or after such date.’’ [Pub. L. 114–113, div. Q, title III, § 307(b), Dec. 18, 2015, 129 Stat. 3089, provided that: ‘‘The amendment made by this section [amending section 1106 of Pub. L. 112–95, set out above] shall take effect as if included in Public Law 113–243 (26 U.S.C. 408 note).’’] DIRECT PAYMENT OF TAX REFUNDS TO INDIVIDUAL RETIREMENT PLANS Pub. L. 109–280, title VIII, § 830, Aug. 17, 2006, 120 Stat. 1002, provided that: ‘‘(a) IN GENERAL.—The Secretary of the Treasury (or the Secretary’s delegate) shall make available a form (or modify existing forms) for use by individuals to di- rect that a portion of any refund of overpayment of tax imposed by chapter 1 of the Internal Revenue Code of 1986 be paid directly to an individual retirement plan (as defined in section 7701(a)(37) of such Code) of such individual. ‘‘(b) EFFECTIVE DATE.—The form required by sub- section (a) shall be made available for taxable years be- ginning after December 31, 2006.’’ PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1998 For 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 begin- ning 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, 1994 For provisions directing that if any amendments made by subtitle B [§§ 521–523] of title V of Pub. L. 102–318 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, 1994, see section 523 of Pub. L. 102–318, set out as a note under section 401 of this title. PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989 For 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. Page 1332 TITLE 26—INTERNAL REVENUE CODE § 408A TRANSITIONAL RULE FOR CONTRIBUTIONS FOR TAXABLE YEARS BEGINNING BEFORE JANUARY 1, 1978 Pub. L. 95–600, title I, § 157(c)(2)(B), Nov. 6, 1978, 92 Stat. 2805, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘In the case of con- tributions for taxable years beginning before January 1, 1978, paragraph (5) of section 408(d) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] shall be ap- plied as if such paragraph did not contain any dollar limitation.’’ EXCHANGE OF FIXED PREMIUM ANNUITY OR ENDOWMENT CONTRACT ISSUED ON OR BEFORE NOV. 6, 1978, FOR INDIVIDUAL RETIREMENT ANNUITY Pub. L. 95–600, title I, § 157(d)(3), Nov. 6, 1978, 92 Stat. 2806, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘In the case of any annuity or endowment contract issued on or before the date of the enactment of this Act [Nov. 6, 1978] which would be an individual retirement annuity within the meaning of section 408(b) of the Internal Revenue Code of 1986 [for- merly I.R.C. 1954] (as amended by paragraph (1) [amend- ing subsec. (b)(2) of this section]) but for the fact that the premiums under the contract are fixed, at the elec- tion of the taxpayer an exchange before January 1, 1981, of that contract for an individual retirement annuity within the meaning of such section 408(b) (as amended by paragraph (1)) shall be treated as a nontaxable ex- change which does not constitute a distribution.’’ § 408A. Roth IRAs (a) General rule Except as provided in this section, a Roth IRA shall be treated for purposes of this title in the same manner as an individual retirement plan. (b) Roth IRA For purposes of this title, the term ‘‘Roth IRA’’ means an individual retirement plan (as defined in section 7701(a)(37)) which is des- ignated (in such manner as the Secretary may prescribe) at the time of establishment of the plan as a Roth IRA. Such designation shall be made in such manner as the Secretary may pre- scribe. (c) Treatment of contributions (1) No deduction allowed No deduction shall be allowed under section 219 for a contribution to a Roth IRA. (2) Contribution limit The aggregate amount of contributions for any taxable year to all Roth IRAs maintained for the benefit of an individual shall not ex- ceed the excess (if any) of— (A) the maximum amount allowable as a deduction under section 219 with respect to such individual for such taxable year (com- puted without regard to subsection (g) of such section), over (B) the aggregate amount of contributions for such taxable year to all other individual retirement plans (other than Roth IRAs) maintained for the benefit of the individual. (3) Limits based on modified adjusted gross in- come (A) Dollar limit The amount determined under paragraph (2) for any taxable year shall not exceed an amount equal to the amount determined under paragraph (2)(A) for such taxable year, reduced (but not below zero) by the amount which bears the same ratio to such amount as— (i) the excess of— (I) the taxpayer’s adjusted gross in- come for such taxable year, over (II) the applicable dollar amount, bears to (ii) $15,000 ($10,000 in the case of a joint return or a married individual filing a sep- arate return). The rules of subparagraphs (B) and (C) of section 219(g)(2) shall apply to any reduction under this subparagraph. (B) Definitions For purposes of this paragraph— (i) adjusted gross income shall be deter- mined in the same manner as under sec- tion 219(g)(3), except that any amount in- cluded in gross income under subsection (d)(3) shall not be taken into account, and (ii) the applicable dollar amount is— (I) in the case of a taxpayer filing a joint return, $150,000, (II) in the case of any other taxpayer (other than a married individual filing a separate return), $95,000, and (III) in the case of a married individual filing a separate return, zero. (C) Marital status Section 219(g)(4) shall apply for purposes of this paragraph. (D) Inflation adjustment In the case of any taxable year beginning in a calendar year after 2006, the dollar amounts in subclauses (I) and (II) of sub- paragraph (B)(ii) shall each be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment deter- mined under section 1(f)(3) for the calendar year in which the taxable year begins, de- termined by substituting ‘‘calendar year 2005’’ for ‘‘calendar year 2016’’ in subpara- graph (A)(ii) thereof. Any increase determined under the pre- ceding sentence shall be rounded to the nearest multiple of $1,000. (E) Special rule for certain transfers from qualified tuition programs The amount determined under subpara- graph (A) shall be increased by the lesser of— (i) the amount of contributions described in section 529(c)(3)(E) for the taxable year, or (ii) the amount of the reduction deter- mined under such subparagraph (deter- mined without regard to this subpara- graph). (4) Mandatory distribution rules not to apply before death Notwithstanding subsections (a)(6) and (b)(3) of section 408 (relating to required distribu- tions), the following provisions shall not apply to any Roth IRA: (A) Section 401(a)(9)(A).