26 U.S.C. § 72 — Annuities; certain proceeds of endowment

Page 462 TITLE 26—INTERNAL REVENUE CODE [§ 71 1 Section catchline amended by Pub. L. 115–97 without cor- responding amendment of analysis. tion [amending this section] shall apply to taxable years beginning after December 31, 2005.’’ EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105–277, div. J, title IV, § 4004(c)(3), Oct. 21, 1998, 112 Stat. 2681–911, provided that: ‘‘The amendment made by subsection (b)(2) [amending this section] shall apply to taxable years beginning after December 31, 1990.’’ EFFECTIVE DATE OF 1993 AMENDMENT Amendment by section 13201(b)(3)(E) of Pub. L. 103–66 applicable to taxable years beginning after Dec. 31, 1992, see section 13201(c) of Pub. L. 103–66, set out as a note under section 1 of this title. EFFECTIVE DATE Section applicable to taxable years beginning after Dec. 31, 1990, see section 11103(e) of Pub. L. 101–508, set out as an Effective Date of 1990 Amendment note under section 1 of this title. PART II—ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME Sec. [71. Repealed.] 72. Annuities; certain proceeds of endowment and life insurance contracts. 73. Services of child. 74. Prizes and awards. 75. Dealers in tax-exempt securities. [76. Repealed.] 77. Commodity credit loans. 78. Dividends received from certain foreign cor- porations by domestic corporations choos- ing foreign tax credit.1 79. Group-term life insurance purchased for em- ployees. 80. Restoration of value of certain securities. [81. Repealed.] 82. Reimbursement of moving expenses. 83. Property transferred in connection with per- formance of services. 84. Transfer of appreciated property to political organizations. 85. Unemployment compensation. 86. Social security and tier 1 railroad retirement benefits. 87. Alcohol and biodiesel fuels credits. 88. Certain amounts with respect to nuclear de- commissioning costs. [89. Repealed.] 90. Illegal Federal irrigation subsidies. 91. Certain foreign branch losses transferred to specified 10-percent owned foreign corpora- tions. Editorial Notes AMENDMENTS 2017—Pub. L. 115–97, title I, §§ 11051(b)(1)(B), 14102(d)(2), Dec. 22, 2017, 131 Stat. 2089, 2194, struck out item 71 ‘‘Alimony and separate maintenance pay- ments’’ and added item 91. 2004—Pub. L. 108–357, title III, § 302(c)(1)(B), Oct. 22, 2004, 118 Stat. 1465, substituted ‘‘and biodiesel fuels credits’’ for ‘‘fuel credit’’ in item 87. 1989—Pub. L. 101–239, title VII, § 7822(c), Dec. 19, 1989, 103 Stat. 2425, substituted ‘‘Illegal Federal irrigation’’ for ‘‘Federal irrigation’’ in item 90. Pub. L. 101–140, title II, § 202(b), Nov. 8, 1989, 103 Stat. 830, struck out item 89 ‘‘Benefits provided under certain employee benefit plans’’. 1987—Pub. L. 100–203, title X, §§ 10201(b)(6), 10611(b), Dec. 22, 1987, 101 Stat. 1330–387, 1330–452, struck out item 81 ‘‘Increase in vacation pay suspense account’’ and added item 90. 1986—Pub. L. 99–514, title VIII, § 805(c)(1)(B), title XI, § 1151(j)(1), Oct. 22, 1986, 100 Stat. 2362, 2508, substituted ‘‘Increase in vacation pay suspense account’’ for ‘‘Cer- tain increases in suspense accounts’’ in item 81, and added item 89. 1984—Pub. L. 98–369, div. A, title I, § 91(f)(2), July 18, 1984, 98 Stat. 608, added item 88. 1983—Pub. L. 98–21, title I, § 121(f)(3), Apr. 20, 1983, 97 Stat. 84, added item 86 and redesignated former item 86 as 87. 1980—Pub. L. 96–223, title II, § 232(c)(3), Apr. 2, 1980, 94 Stat. 277, added item 86. 1978—Pub. L. 95–600, title I, § 112(c)(1), Nov. 6, 1978, 92 Stat. 2778, added item 85. 1976—Pub. L. 94–455, title XIX, § 1901(b)(5), Oct. 4, 1976, 90 Stat. 1793, struck out item 76 ‘‘Mortgages made or obligations issued by joint-stock land banks’’. 1975—Pub. L. 93–625, §§ 4(c)(2), 13(a)(2), Jan. 3, 1975, 88 Stat. 2111, 2121, substituted ‘‘Certain increases in sus- pense accounts’’ for ‘‘Increases in suspense account under section 166(g)’’ in item 81, and added item 84. 1969—Pub. L. 91–172, title II, § 231(c)(1), title III, § 321(c), Dec. 30, 1969, 83 Stat. 579, 591, added items 82, 83. 1966—Pub. L. 89–722, § 1(b)(2), Nov. 2, 1966, 80 Stat. 1152, added item 81. Pub. L. 89–384, § 1(b)(2), Apr. 8, 1966, 80 Stat. 102, added item 80. 1964—Pub. L. 88–272, title II, § 204(a)(2), Feb. 26, 1964, 78 Stat. 36, added item 79. 1962—Pub. L. 87–834, § 9(d)(1), Oct. 16, 1962, 76 Stat. 1001, added item 78. [§ 71. Repealed. Pub. L. 115–97, title I, § 11051(b)(1)(B), Dec. 22, 2017, 131 Stat. 2089] Section, Aug. 16, 1954, ch. 736, 68A Stat. 19; Pub. L. 98–369, div. A, title IV, § 422(a), July 18, 1984, 98 Stat. 795; Pub. L. 99–514, title XVIII, § 1843(a)–(c)(1), (d), Oct. 22, 1986, 100 Stat. 2853, 2855, related to inclusion in gross in- come of amounts received as alimony or separate main- tenance payments. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal applicable to any divorce or separation instru- ment (as defined in former subsec. (b)(2) of this section as in effect before Dec. 22, 2017) executed after Dec. 31, 2018, and to such instruments executed on or before Dec. 31, 2018, and modified after Dec. 31, 2018, if the modification expressly provides 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 an Effective Date of 2017 Amendment note under section 61 of this title. § 72. Annuities; certain proceeds of endowment and life insurance contracts (a) General rules for annuities (1) Income inclusion Except as otherwise provided in this chap- ter, gross income includes any amount re- ceived as an annuity (whether for a period cer- tain or during one or more lives) under an an- nuity, endowment, or life insurance contract. (2) Partial annuitization If any amount is received as an annuity for a period of 10 years or more or during one or more lives under any portion of an annuity, endowment, or life insurance contract— (A) such portion shall be treated as a sepa- rate contract for purposes of this section, (B) for purposes of applying subsections (b), (c), and (e), the investment in the con- Page 463 TITLE 26—INTERNAL REVENUE CODE § 72 tract shall be allocated pro rata between each portion of the contract from which amounts are received as an annuity and the portion of the contract from which amounts are not received as an annuity, and (C) a separate annuity starting date under subsection (c)(4) shall be determined with re- spect to each portion of the contract from which amounts are received as an annuity. (b) Exclusion ratio (1) In general Gross income does not include that part of any amount received as an annuity under an annuity, endowment, or life insurance con- tract which bears the same ratio to such amount as the investment in the contract (as of the annuity starting date) bears to the ex- pected return under the contract (as of such date). (2) Exclusion limited to investment The portion of any amount received as an annuity which is excluded from gross income under paragraph (1) shall not exceed the unre- covered investment in the contract imme- diately before the receipt of such amount. (3) Deduction where annuity payments cease before entire investment recovered (A) In general If— (i) after the annuity starting date, pay- ments as an annuity under the contract cease by reason of the death of an annu- itant, and (ii) as of the date of such cessation, there is unrecovered investment in the contract, the amount of such unrecovered investment (in excess of any amount specified in sub- section (e)(5) which was not included in gross income) shall be allowed as a deduc- tion to the annuitant for his last taxable year. (B) Payments to other persons In the case of any contract which provides for payments meeting the requirements of subparagraphs (B) and (C) of subsection (c)(2), the deduction under subparagraph (A) shall be allowed to the person entitled to such payments for the taxable year in which such payments are received. (C) Net operating loss deductions provided For purposes of section 172, a deduction al- lowed under this paragraph shall be treated as if it were attributable to a trade or busi- ness of the taxpayer. (4) Unrecovered investment For purposes of this subsection, the unre- covered investment in the contract as of any date is— (A) the investment in the contract (deter- mined without regard to subsection (c)(2)) as of the annuity starting date, reduced by (B) the aggregate amount received under the contract on or after such annuity start- ing date and before the date as of which the determination is being made, to the extent such amount was excludable from gross in- come under this subtitle. (c) Definitions (1) Investment in the contract For purposes of subsection (b), the invest- ment in the contract as of the annuity start- ing date is— (A) the aggregate amount of premiums or other consideration paid for the contract, minus (B) the aggregate amount received under the contract before such date, to the extent that such amount was excludable from gross income under this subtitle or prior income tax laws. (2) Adjustment in investment where there is re- fund feature If— (A) the expected return under the contract depends in whole or in part on the life ex- pectancy of one or more individuals; (B) the contract provides for payments to be made to a beneficiary (or to the estate of an annuitant) on or after the death of the annuitant or annuitants; and (C) such payments are in the nature of a refund of the consideration paid, then the value (computed without discount for interest) of such payments on the annuity starting date shall be subtracted from the amount determined under paragraph (1). Such value shall be computed in accordance with actuarial tables prescribed by the Secretary. For purposes of this paragraph and of sub- section (e)(2)(A), the term ‘‘refund of the con- sideration paid’’ includes amounts payable after the death of an annuitant by reason of a provision in the contract for a life annuity with minimum period of payments certain, but (if part of the consideration was contrib- uted by an employer) does not include that part of any payment to a beneficiary (or to the estate of the annuitant) which is not attrib- utable to the consideration paid by the em- ployee for the contract as determined under paragraph (1)(A). (3) Expected return For purposes of subsection (b), the expected return under the contract shall be determined as follows: (A) Life expectancy If the expected return under the contract, for the period on and after the annuity start- ing date, depends in whole or in part on the life expectancy of one or more individuals, the expected return shall be computed with reference to actuarial tables prescribed by the Secretary. (B) Installment payments If subparagraph (A) does not apply, the ex- pected return is the aggregate of the amounts receivable under the contract as an annuity. (4) Annuity starting date For purposes of this section, the annuity starting date in the case of any contract is the first day of the first period for which an amount is received as an annuity under the contract. Page 464 TITLE 26—INTERNAL REVENUE CODE § 72 (d) Special rules for qualified employer retire- ment plans (1) Simplified method of taxing annuity pay- ments (A) In general In the case of any amount received as an annuity under a qualified employer retire- ment plan— (i) subsection (b) shall not apply, and (ii) the investment in the contract shall be recovered as provided in this paragraph. (B) Method of recovering investment in con- tract (i) In general Gross income shall not include so much of any monthly annuity payment under a qualified employer retirement plan as does not exceed the amount obtained by divid- ing— (I) the investment in the contract (as of the annuity starting date), by (II) the number of anticipated pay- ments determined under the table con- tained in clause (iii) (or, in the case of a contract to which subsection (c)(3)(B) ap- plies, the number of monthly annuity payments under such contract). (ii) Certain rules made applicable Rules similar to the rules of paragraphs (2) and (3) of subsection (b) shall apply for purposes of this paragraph. (iii) Number of anticipated payments If the annuity is payable over the life of a single individual, the number of antici- pated payments shall be determined as fol- lows: If the age of the annuitant on the annuity starting date is: The number of antici- pated pay- ments is: Not more than 55 ............................... 360 More than 55 but not more than 60 .... 310 More than 60 but not more than 65 .... 260 More than 65 but not more than 70 .... 210 More than 70 ...................................... 160. (iv) Number of anticipated payments where more than one life If the annuity is payable over the lives of more than 1 individual, the number of an- ticipated payments shall be determined as follows: If the combined ages of annuitants are: The num- ber is: Not more than 110 ............................... 410 More than 110 but not more than 120 .. 360 More than 120 but not more than 130 .. 310 More than 130 but not more than 140 .. 260 More than 140 ...................................... 210. (C) Adjustment for refund feature not appli- cable For purposes of this paragraph, investment in the contract shall be determined under subsection (c)(1) without regard to sub- section (c)(2). (D) Special rule where lump sum paid in con- nection with commencement of annuity payments If, in connection with the commencement of annuity payments under any qualified employer retirement plan, the taxpayer re- ceives a lump-sum payment— (i) such payment shall be taxable under subsection (e) as if received before the an- nuity starting date, and (ii) the investment in the contract for purposes of this paragraph shall be deter- mined as if such payment had been so re- ceived. (E) Exception This paragraph shall not apply in any case where the primary annuitant has attained age 75 on the annuity starting date unless there are fewer than 5 years of guaranteed payments under the annuity. (F) Adjustment where annuity payments not on monthly basis In any case where the annuity payments are not made on a monthly basis, appro- priate adjustments in the application of this paragraph shall be made to take into ac- count the period on the basis of which such payments are made. (G) Qualified employer retirement plan For purposes of this paragraph, the term ‘‘qualified employer retirement plan’’ means any plan or contract described in paragraph (1), (2), or (3) of section 4974(c). (2) Treatment of employee contributions under defined contribution plans For purposes of this section, employee con- tributions (and any income allocable thereto) under a defined contribution plan may be treated as a separate contract. (3) Treatment of contributions to a pension- linked emergency savings account For purposes of this section, contributions to a pension-linked emergency savings ac- count to which section 402A(e) applies (and any income allocable thereto) may be treated as a separate contract. (e) Amounts not received as annuities (1) Application of subsection (A) In general This subsection shall apply to any amount which— (i) is received under an annuity, endow- ment, or life insurance contract, and (ii) is not received as an annuity, if no provision of this subtitle (other than this subsection) applies with respect to such amount. (B) Dividends For purposes of this section, any amount received which is in the nature of a dividend or similar distribution shall be treated as an amount not received as an annuity. (2) General rule Any amount to which this subsection ap- plies— Page 465 TITLE 26—INTERNAL REVENUE CODE § 72 (A) if received on or after the annuity starting date, shall be included in gross in- come, or (B) if received before the annuity starting date— (i) shall be included in gross income to the extent allocable to income on the con- tract, and (ii) shall not be included in gross income to the extent allocable to the investment in the contract. (3) Allocation of amounts to income and invest- ment For purposes of paragraph (2)(B)— (A) Allocation to income Any amount to which this subsection ap- plies shall be treated as allocable to income on the contract to the extent that such amount does not exceed the excess (if any) of— (i) the cash value of the contract (deter- mined without regard to any surrender charge) immediately before the amount is received, over (ii) the investment in the contract at such time. (B) Allocation to investment Any amount to which this subsection ap- plies shall be treated as allocable to invest- ment in the contract to the extent that such amount is not allocated to income under subparagraph (A). (4) Special rules for application of paragraph (2)(B) For purposes of paragraph (2)(B)— (A) Loans treated as distributions If, during any taxable year, an individual— (i) receives (directly or indirectly) any amount as a loan under any contract to which this subsection applies, or (ii) assigns or pledges (or agrees to as- sign or pledge) any portion of the value of any such contract, such amount or portion shall be treated as received under the contract as an amount not received as an annuity. The preceding sentence shall not apply for purposes of de- termining investment in the contract, ex- cept that the investment in the contract shall be increased by any amount included in gross income by reason of the amount treated as received under the preceding sen- tence. (B) Treatment of policyholder dividends Any amount described in paragraph (1)(B) shall not be included in gross income under paragraph (2)(B)(i) to the extent such amount is retained by the insurer as a pre- mium or other consideration paid for the contract. (C) Treatment of transfers without adequate consideration (i) In general If an individual who holds an annuity contract transfers it without full and ade- quate consideration, such individual shall be treated as receiving an amount equal to the excess of— (I) the cash surrender value of such contract at the time of transfer, over (II) the investment in such contract at such time, under the contract as an amount not re- ceived as an annuity. (ii) Exception for certain transfers between spouses or former spouses Clause (i) shall not apply to any transfer to which section 1041(a) (relating to trans- fers of property between spouses or inci- dent to divorce) applies. (iii) Adjustment to investment in contract of transferee If under clause (i) an amount is included in the gross income of the transferor of an annuity contract, the investment in the contract of the transferee in such contract shall be increased by the amount so in- cluded. (5) Retention of existing rules in certain cases (A) In general In any case to which this paragraph ap- plies— (i) paragraphs (2)(B) and (4)(A) shall not apply, and (ii) if paragraph (2)(A) does not apply, the amount shall be included in gross in- come, but only to the extent it exceeds the investment in the contract. (B) Existing contracts This paragraph shall apply to contracts entered into before August 14, 1982. Any amount allocable to investment in the con- tract after August 13, 1982, shall be treated as from a contract entered into after such date. (C) Certain life insurance and endowment contracts Except as provided in paragraph (10) and except to the extent prescribed by the Sec- retary by regulations, this paragraph shall apply to any amount not received as an an- nuity which is received under a life insur- ance or endowment contract. (D) Contracts under qualified plans Except as provided in paragraph (8), this paragraph shall apply to any amount re- ceived— (i) from a trust described in section 401(a) which is exempt from tax under sec- tion 501(a), (ii) from a contract— (I) purchased by a trust described in clause (i), (II) purchased as part of a plan de- scribed in section 403(a), (III) described in section 403(b), or (IV) provided for employees of a life in- surance company under a plan described in section 818(a)(3), or (iii) from an individual retirement ac- count or an individual retirement annuity. Page 466 TITLE 26—INTERNAL REVENUE CODE § 72 1 So in original. Probably should be paragraph ‘‘(2)(B)’’. Any dividend described in section 404(k) which is received by a participant or bene- ficiary shall, for purposes of this subpara- graph, be treated as paid under a separate contract to which clause (ii)(I) applies. (E) Full refunds, surrenders, redemptions, and maturities This paragraph shall apply to— (i) any amount received, whether in a single sum or otherwise, under a contract in full discharge of the obligation under the contract which is in the nature of a re- fund of the consideration paid for the con- tract, and (ii) any amount received under a con- tract on its complete surrender, redemp- tion, or maturity. In the case of any amount to which the pre- ceding sentence applies, the rule of para- graph (2)(A) shall not apply. (6) Investment in the contract For purposes of this subsection, the invest- ment in the contract as of any date is— (A) the aggregate amount of premiums or other consideration paid for the contract be- fore such date, minus (B) the aggregate amount received under the contract before such date, to the extent that such amount was excludable from gross income under this subtitle or prior income tax laws. [(7) Repealed. Pub. L. 100–647, title I, § 1011A(b)(9)(A), Nov. 10, 1988, 102 Stat. 3474] (8) Extension of paragraph (2)(b) 1 to qualified plans (A) In general Notwithstanding any other provision of this subsection, in the case of any amount received before the annuity starting date from a trust or contract described in para- graph (5)(D), paragraph (2)(B) shall apply to such amounts. (B) Allocation of amount received For purposes of paragraph (2)(B), the amount allocated to the investment in the contract shall be the portion of the amount described in subparagraph (A) which bears the same ratio to such amount as the invest- ment in the contract bears to the account balance. The determination under the pre- ceding sentence shall be made as of the time of the distribution or at such other time as the Secretary may prescribe. (C) Treatment of forfeitable rights If an employee does not have a nonforfeit- able right to any amount under any trust or contract to which subparagraph (A) applies, such amount shall not be treated as part of the account balance. (D) Investment in the contract before 1987 In the case of a plan which on May 5, 1986, permitted withdrawal of any employee con- tributions before separation from service, subparagraph (A) shall apply only to the ex- tent that amounts received before the annu- ity starting date (when increased by amounts previously received under the con- tract after December 31, 1986) exceed the in- vestment in the contract as of December 31, 1986. (9) Extension of paragraph (2)(B) to qualified tuition programs and Coverdell education savings accounts Notwithstanding any other provision of this subsection, paragraph (2)(B) shall apply to amounts received under a qualified tuition program (as defined in section 529(b)) or under a Coverdell education savings account (as de- fined in section 530(b)). The rule of paragraph (8)(B) shall apply for purposes of this para- graph. (10) Treatment of modified endowment con- tracts (A) In general Notwithstanding paragraph (5)(C), in the case of any modified endowment contract (as defined in section 7702A)— (i) paragraphs (2)(B) and (4)(A) shall apply, and (ii) in applying paragraph (4)(A), ‘‘any person’’ shall be substituted for ‘‘an indi- vidual’’. (B) Treatment of certain burial contracts Notwithstanding subparagraph (A), para- graph (4)(A) shall not apply to any assign- ment (or pledge) of a modified endowment contract if such assignment (or pledge) is solely to cover the payment of expenses re- ferred to in section 7702(e)(2)(C)(iii) and if the maximum death benefit under such con- tract does not exceed $25,000. (11) Special rules for certain combination con- tracts providing long-term care insurance Notwithstanding paragraphs (2), (5)(C), and (10), in the case of any charge against the cash value of an annuity contract or the cash sur- render value of a life insurance contract made as payment for coverage under a qualified long-term care insurance contract which is part of or a rider on such annuity or life insur- ance contract— (A) the investment in the contract shall be reduced (but not below zero) by such charge, and (B) such charge shall not be includible in gross income. (12) Anti-abuse rules (A) In general For purposes of determining the amount includible in gross income under this sub- section— (i) all modified endowment contracts issued by the same company to the same policyholder during any calendar year shall be treated as 1 modified endowment contract, and (ii) all annuity contracts issued by the same company to the same policyholder during any calendar year shall be treated as 1 annuity contract. Page 467 TITLE 26—INTERNAL REVENUE CODE § 72 The preceding sentence shall not apply to any contract described in paragraph (5)(D). (B) Regulatory authority The Secretary may by regulations pre- scribe such additional rules as may be nec- essary or appropriate to prevent avoidance of the purposes of this subsection through serial purchases of contracts or otherwise. (f) Special rules for computing employees’ con- tributions In computing, for purposes of subsection (c)(1)(A), the aggregate amount of premiums or other consideration paid for the contract, and for purposes of subsection (e)(6), the aggregate premiums or other consideration paid, amounts contributed by the employer shall be included, but only to the extent that— (1) such amounts were includible in the gross income of the employee under this subtitle or prior income tax laws; or (2) if such amounts had been paid directly to the employee at the time they were contrib- uted, they would not have been includible in the gross income of the employee under the law applicable at the time of such contribu- tion. Paragraph (2) shall not apply to amounts which were contributed by the employer after Decem- ber 31, 1962, and which would not have been in- cludible in the gross income of the employee by reason of the application of section 911 if such amounts had been paid directly to the employee at the time of contribution. The preceding sen- tence shall not apply to amounts which were contributed by the employer, as determined under regulations prescribed by the Secretary, to provide pension or annuity credits, to the ex- tent such credits are attributable to services performed before January 1, 1963, and are pro- vided pursuant to pension or annuity plan provi- sions in existence on March 12, 1962, and on that date applicable to such services, or to the extent such credits are attributable to services per- formed as a foreign missionary (within the meaning of section 403(b)(2)(D)(iii), as in effect before the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001). (g) Rules for transferee where transfer was for value Where any contract (or any interest therein) is transferred (by assignment or otherwise) for a valuable consideration, to the extent that the contract (or interest therein) does not, in the hands of the transferee, have a basis which is de- termined by reference to the basis in the hands of the transferor, then— (1) for purposes of this section, only the ac- tual value of such consideration, plus the amount of the premiums and other consider- ation paid by the transferee after the transfer, shall be taken into account in computing the aggregate amount of the premiums or other consideration paid for the contract; (2) for purposes of subsection (c)(1)(B), there shall be taken into account only the aggregate amount received under the contract by the transferee before the annuity starting date, to the extent that such amount was excludable from gross income under this subtitle or prior income tax laws; and (3) the annuity starting date is the first day of the first period for which the transferee re- ceived an amount under the contract as an an- nuity. For purposes of this subsection, the term ‘‘transferee’’ includes a beneficiary of, or the es- tate of, the transferee. (h) Option to receive annuity in lieu of lump sum If— (1) a contract provides for payment of a lump sum in full discharge of an obligation under the contract, subject to an option to re- ceive an annuity in lieu of such lump sum; (2) the option is exercised within 60 days after the day on which such lump sum first be- came payable; and (3) part or all of such lump sum would (but for this subsection) be includible in gross in- come by reason of subsection (e)(1), then, for purposes of this subtitle, no part of such lump sum shall be considered as includible in gross income at the time such lump sum first became payable. [(i) Repealed. Pub. L. 94–455, title XIX, § 1951(b)(1)(A), Oct. 4, 1976, 90 Stat. 1836] (j) Interest Notwithstanding any other provision of this section, if any amount is held under an agree- ment to pay interest thereon, the interest pay- ments shall be included in gross income. [(k) Repealed. Pub. L. 98–369, div. A, title IV, § 421(b)(1), July 18, 1984, 98 Stat. 794] (l) Face-amount certificates For purposes of this section, the term ‘‘endow- ment contract’’ includes a face-amount certifi- cate, as defined in section 2(a)(15) of the Invest- ment Company Act of 1940 (15 U.S.C., sec. 80a–2), issued after December 31, 1954. (m) Special rules applicable to employee annu- ities and distributions under employee plans [(1) Repealed. Pub. L. 93–406, title II, § 2001(h)(2), Sept. 2, 1974, 88 Stat. 957] (2) Computation of consideration paid by the employee In computing— (A) the aggregate amount of premiums or other consideration paid for the contract for purposes of subsection (c)(1)(A) (relating to the investment in the contract), and (B) the aggregate premiums or other con- sideration paid for purposes of subsection (e)(6) (relating to certain amounts not re- ceived as an annuity), any amount allowed as a deduction with re- spect to the contract under section 404 which was paid while the employee was an employee within the meaning of section 401(c)(1) shall be treated as consideration contributed by the employer, and there shall not be taken into account any portion of the premiums or other consideration for the contract paid while the employee was an owner-employee which is properly allocable (as determined under regu- lations prescribed by the Secretary) to the Page 468 TITLE 26—INTERNAL REVENUE CODE § 72 cost of life, accident, health, or other insur- ance. (3) Life insurance contracts (A) This paragraph shall apply to any life insurance contract— (i) purchased as a part of a plan de- scribed in section 403(a), or (ii) purchased by a trust described in sec- tion 401(a) which is exempt from tax under section 501(a) if the proceeds of such con- tract are payable directly or indirectly to a participant in such trust or to a bene- ficiary of such participant. (B) Any contribution to a plan described in subparagraph (A)(i) or a trust described in subparagraph (A)(ii) which is allowed as a deduction under section 404, and any income of a trust described in subparagraph (A)(ii), which is determined in accordance with reg- ulations prescribed by the Secretary to have been applied to purchase the life insurance protection under a contract described in sub- paragraph (A), is includible in the gross in- come of the participant for the taxable year when so applied. (C) In the case of the death of an indi- vidual insured under a contract described in subparagraph (A), an amount equal to the cash surrender value of the contract imme- diately before the death of the insured shall be treated as a payment under such plan or a distribution by such trust, and the excess of the amount payable by reason of the death of the insured over such cash sur- render value shall not be includible in gross income under this section and shall be treat- ed as provided in section 101. [(4) Repealed. Pub. L. 97–248, title II, § 236(b)(1), Sept. 3, 1982, 96 Stat. 510] (5) Penalties applicable to certain amounts re- ceived by 5-percent owners (A) This paragraph applies to amounts which are received from a qualified trust de- scribed in section 401(a) or under a plan de- scribed in section 403(a) at any time by an individual who is, or has been, a 5-percent owner, or by a successor of such an indi- vidual, but only to the extent such amounts are determined, under regulations prescribed by the Secretary, to exceed the benefits pro- vided for such individual under the plan for- mula. (B) If a person receives an amount to which this paragraph applies, his tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the por- tion of the amount so received which is in- cludible in his gross income for such taxable year. (C) For purposes of this paragraph, the term ‘‘5-percent owner’’ means any indi- vidual who, at any time during the 5 plan years preceding the plan year ending in the taxable year in which the amount is re- ceived, is a 5-percent owner (as defined in section 416(i)(1)(B)). (6) Owner-employee defined For purposes of this subsection, the term ‘‘owner-employee’’ has the meaning assigned to it by section 401(c)(3) and includes an indi- vidual for whose benefit an individual retire- ment account or annuity described in section 408(a) or (b) is maintained. For purposes of the preceding sentence, the term ‘‘owner-em- ployee’’ shall include an employee within the meaning of section 401(c)(1). (7) Meaning of disabled For purposes of this section, an individual shall be considered to be disabled if he is un- able to engage in any substantial gainful ac- tivity by reason of any medically deter- minable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration. An in- dividual shall not be considered to be disabled unless he furnishes proof of the existence thereof in such form and manner as the Sec- retary may require. [(8) Repealed. Pub. L. 97–248, title II, § 236(b)(1), Sept. 3, 1982, 96 Stat. 510] [(9) Repealed. Pub. L. 98–369, div. A, title VII, § 713(d)(1), July 18, 1984, 98 Stat. 957] (10) Determination of investment in the con- tract in the case of qualified domestic rela- tions orders Under regulations prescribed by the Sec- retary, in the case of a distribution or pay- ment made to an alternate payee who is the spouse or former spouse of the participant pur- suant to a qualified domestic relations order (as defined in section 414(p)), the investment in the contract as of the date prescribed in such regulations shall be allocated on a pro rata basis between the present value of such distribution or payment and the present value of all other benefits payable with respect to the participant to which such order relates. (n) Annuities under retired serviceman’s family protection plan or survivor benefit plan Subsection (b) shall not apply in the case of amounts received after December 31, 1965, as an annuity under chapter 73 of title 10 of the United States Code, but all such amounts shall be ex- cluded from gross income until there has been so excluded (under section 122(b)(1) or this section, including amounts excluded before January 1, 1966) an amount equal to the consideration for the contract (as defined by section 122(b)(2)), plus any amount treated pursuant to section 101(b)(2)(D) (as in effect on the day before the date of the enactment of the Small Business Job Protection Act of 1996) as additional consider- ation paid by the employee. Thereafter all amounts so received shall be included in gross income. (o) Special rules for distributions from qualified plans to which employee made deductible contributions (1) Treatment of contributions For purposes of this section and sections 402 and 403, notwithstanding section 414(h), any deductible employee contribution made to a qualified employer plan or government plan shall be treated as an amount contributed by the employer which is not includible in the gross income of the employee. Page 469 TITLE 26—INTERNAL REVENUE CODE § 72 [(2) Repealed. Pub. L. 100–647, title I, § 1011A(c)(8), Nov. 10, 1988, 102 Stat. 3476] (3) Amounts constructively received (A) In general For purposes of this subsection, rules simi- lar to the rules provided by subsection (p) (other than the exception contained in para- graph (2) thereof) shall apply. (B) Purchase of life insurance To the extent any amount of accumulated deductible employee contributions of an em- ployee are applied to the purchase of life in- surance contracts, such amount shall be treated as distributed to the employee in the year so applied. (4) Special rule for treatment of rollover amounts For purposes of sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3), and 457(e)(16), the Secretary shall prescribe regulations providing for such allocations of amounts attributable to accu- mulated deductible employee contributions, and for such other rules, as may be necessary to insure that such accumulated deductible employee contributions do not become eligible for additional tax benefits (or freed from limi- tations) through the use of rollovers. (5) Definitions and special rules For purposes of this subsection— (A) Deductible employee contributions The term ‘‘deductible employee contribu- tions’’ means any qualified voluntary em- ployee contribution (as defined in section 219(e)(2)) made after December 31, 1981, in a taxable year beginning after such date and made for a taxable year beginning before January 1, 1987, and allowable as a deduction under section 219(a) for such taxable year. (B) Accumulated deductible employee con- tributions The term ‘‘accumulated deductible em- ployee contributions’’ means the deductible employee contributions— (i) increased by the amount of income and gain allocable to such contributions, and (ii) reduced by the sum of the amount of loss and expense allocable to such con- tributions and the amounts distributed with respect to the employee which are at- tributable to such contributions (or in- come or gain allocable to such contribu- tions). (C) Qualified employer plan The term ‘‘qualified employer plan’’ has the meaning given to such term by sub- section (p)(3)(A)(i). (D) Government plan The term ‘‘government plan’’ has the meaning given such term by subsection (p)(3)(B). (6) Ordering rules Unless the plan specifies otherwise, any dis- tribution from such plan shall not be treated as being made from the accumulated deduct- ible employee contributions, until all other amounts to the credit of the employee have been distributed. (p) Loans treated as distributions For purposes of this section— (1) Treatment as distributions (A) Loans If during any taxable year a participant or beneficiary receives (directly or indirectly) any amount as a loan from a qualified em- ployer plan, such amount shall be treated as having been received by such individual as a distribution under such plan. (B) Assignments or pledges If during any taxable year a participant or beneficiary assigns (or agrees to assign) or pledges (or agrees to pledge) any portion of his interest in a qualified employer plan, such portion shall be treated as having been received by such individual as a loan from such plan. (2) Exception for certain loans (A) General rule Paragraph (1) shall not apply to any loan to the extent that such loan (when added to the outstanding balance of all other loans from such plan whether made on, before, or after August 13, 1982), does not exceed the lesser of— (i) $50,000, reduced by the excess (if any) of— (I) the highest outstanding balance of loans from the plan during the 1-year pe- riod ending on the day before the date on which such loan was made, over (II) the outstanding balance of loans from the plan on the date on which such loan was made, or (ii) the greater of (I) one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan, or (II) $10,000. For purposes of clause (ii), the present value of the nonforfeitable accrued benefit shall be determined without regard to any accumu- lated deductible employee contributions (as defined in subsection (o)(5)(B)). (B) Requirement that loan be repayable with- in 5 years (i) In general Subparagraph (A) shall not apply to any loan unless such loan, by its terms, is re- quired to be repaid within 5 years. (ii) Exception for home loans Clause (i) shall not apply to any loan used to acquire any dwelling unit which within a reasonable time is to be used (de- termined at the time the loan is made) as the principal residence of the participant. (C) Requirement of level amortization Except as provided in regulations, this paragraph shall not apply to any loan unless substantially level amortization of such loan Page 470 TITLE 26—INTERNAL REVENUE CODE § 72 (with payments not less frequently than quarterly) is required over the term of the loan. (D) Prohibition of loans through credit cards and other similar arrangements Subparagraph (A) shall not apply to any loan which is made through the use of any credit card or any other similar arrange- ment. (E) Related employers and related plans For purposes of this paragraph— (i) the rules of subsections (b), (c), and (m) of section 414 shall apply, and (ii) all plans of an employer (determined after the application of such subsections) shall be treated as 1 plan. (3) Denial of interest deductions in certain cases (A) In general No deduction otherwise allowable under this chapter shall be allowed under this chapter for any interest paid or accrued on any loan to which paragraph (1) does not apply by reason of paragraph (2) during the period described in subparagraph (B). (B) Period to which subparagraph (A) applies For purposes of subparagraph (A), the pe- riod described in this subparagraph is the pe- riod— (i) on or after the 1st day on which the individual to whom the loan is made is a key employee (as defined in section 416(i)), or (ii) such loan is secured by amounts at- tributable to elective deferrals described in subparagraph (A) or (C) of section 402(g)(3). (4) Qualified employer plan, etc. For purposes of this subsection— (A) Qualified employer plan (i) In general The term ‘‘qualified employer plan’’ means— (I) a plan described in section 401(a) which includes a trust exempt from tax under section 501(a), (II) an annuity plan described in sec- tion 403(a), and (III) a plan under which amounts are contributed by an individual’s employer for an annuity contract described in sec- tion 403(b). (ii) Special rule The term ‘‘qualified employer plan’’ shall include any plan which was (or was determined to be) a qualified employer plan or a government plan. (B) Government plan The term ‘‘government plan’’ means any plan, whether or not qualified, established and maintained for its employees by the United States, by a State or political sub- division thereof, or by an agency or instru- mentality of any of the foregoing. (5) Special rules for loans, etc., from certain contracts For purposes of this subsection, any amount received as a loan under a contract purchased under a qualified employer plan (and any as- signment or pledge with respect to such a con- tract) shall be treated as a loan under such employer plan. (6) Increase in limit on loans not treated as dis- tributions (A) In general In the case of any loan from a qualified employer plan to a qualified individual made during the applicable period— (i) clause (i) of paragraph (2)(A) shall be applied by substituting ‘‘$100,000’’ for ‘‘$50,000’’, and (ii) clause (ii) of such paragraph shall be applied by substituting ‘‘the present value of the nonforfeitable accrued benefit of the employee under the plan’’ for ‘‘one-half of the present value of the nonforfeitable ac- crued benefit of the employee under the plan’’. (B) Delay of repayment In the case of a qualified individual with respect to any qualified disaster with an out- standing loan from a qualified employer plan on or after the applicable date with respect to the qualified disaster— (i) if the due date pursuant to subpara- graph (B) or (C) of paragraph (2) for any re- payment with respect to such loan occurs during the period beginning on the first day of the incident period of such qualified disaster and ending on the date which is 180 days after the last day of such incident period, such due date may be delayed for 1 year, (ii) any subsequent repayments with re- spect to any such loan may be appro- priately adjusted to reflect the delay in the due date under clause (i) and any inter- est accruing during such delay, and (iii) in determining the 5-year period and the term of a loan under subparagraph (B) or (C) of paragraph (2), the period de- scribed in clause (i) may be disregarded. (C) Definitions For purposes of this paragraph— (i) Qualified individual The term ‘‘qualified individual’’ means any individual— (I) whose principal place of abode at any time during the incident period of any qualified disaster is located in the qualified disaster area with respect to such qualified disaster, and (II) who has sustained an economic loss by reason of such qualified disaster. (ii) Applicable period The applicable period with respect to any disaster is the period— (I) beginning on the applicable date with respect to such disaster, and (II) ending on the date that is 180 days after such applicable date. (iii) Other terms For purposes of this paragraph— (I) the terms ‘‘applicable date’’, ‘‘quali- fied disaster’’, ‘‘qualified disaster area’’, Page 471 TITLE 26—INTERNAL REVENUE CODE § 72 2 So in original. The word ‘‘or’’ probably should not appear. and ‘‘incident period’’ have the meaning given such terms under subsection (t)(11), and (II) the term ‘‘applicable period’’ has the meaning given such term under sub- section (t)(8). (q) 10-percent penalty for premature distribu- tions from annuity contracts (1) Imposition of penalty If any taxpayer receives any amount under an annuity contract, the taxpayer’s tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of such amount which is includible in gross in- come. (2) Subsection not to apply to certain distribu- tions Paragraph (1) shall not apply to any dis- tribution— (A) made on or after the date on which the taxpayer attains age 591⁄2, (B) made on or after the death of the hold- er (or, where the holder is not an individual, the death of the primary annuitant (as de- fined in subsection (s)(6)(B))), (C) attributable to the taxpayer’s becom- ing disabled within the meaning of sub- section (m)(7), (D) which is a part of a series of substan- tially equal periodic payments (not less fre- quently than annually) made for the life (or life expectancy) of the taxpayer or the joint lives (or joint life expectancies) of such tax- payer and his designated beneficiary, (E) from a plan, contract, account, trust, or annuity described in subsection (e)(5)(D), (F) allocable to investment in the contract before August 14, 1982, or 2 (G) under a qualified funding asset (within the meaning of section 130(d), but without regard to whether there is a qualified assign- ment), (H) to which subsection (t) applies (with- out regard to paragraph (2) thereof), (I) under an immediate annuity contract (within the meaning of section 72(u)(4)), or (J) which is purchased by an employer upon the termination of a plan described in section 401(a) or 403(a) and which is held by the employer until such time as the em- ployee separates from service. For purposes of subparagraph (D), periodic payments shall not fail to be treated as sub- stantially equal merely because they are amounts received as an annuity, and such periodic payments shall be deemed to be sub- stantially equal if they are payable over a pe- riod described in subparagraph (D) and would satisfy the requirements applicable to annuity payments under section 401(a)(9) if such re- quirements applied. (3) Change in substantially equal payments (A) In general If— (i) paragraph (1) does not apply to a dis- tribution by reason of paragraph (2)(D), and (ii) the series of payments under such paragraph are subsequently modified (other than by reason of death or dis- ability)— (I) before the close of the 5-year period beginning on the date of the first pay- ment and after the taxpayer attains age 591⁄2, or (II) before the taxpayer attains age 591⁄2, the taxpayer’s tax for the 1st taxable year in which such modification occurs shall be in- creased by an amount, determined under regulations, equal to the tax which (but for paragraph (2)(D)) would have been imposed, plus interest for the deferral period (within the meaning of subsection (t)(4)(B)). (B) Exchanges to subsequent contracts If— (i) payments described in paragraph (2)(D) are being made from an annuity con- tract, (ii) an exchange of all or a portion of such contract for another contract is made under section 1035, and (iii) the aggregate distributions from the contracts involved in the exchange con- tinue to satisfy the requirements of para- graph (2)(D) as if the exchange had not taken place, such exchange shall not be treated as a modification under subparagraph (A)(ii), and compliance with paragraph (2)(D) shall be determined on the basis of the combined dis- tributions described in clause (iii). (r) Certain railroad retirement benefits treated as received under employer plans (1) In general Notwithstanding any other provision of law, any benefit provided under the Railroad Re- tirement Act of 1974 (other than a tier 1 rail- road retirement benefit) shall be treated for purposes of this title as a benefit provided under an employer plan which meets the re- quirements of section 401(a). (2) Tier 2 taxes treated as contributions (A) In general For purposes of paragraph (1)— (i) the tier 2 portion of the tax imposed by section 3201 (relating to tax on employ- ees) shall be treated as an employee con- tribution, (ii) the tier 2 portion of the tax imposed by section 3211 (relating to tax on em- ployee representatives) shall be treated as an employee contribution, and (iii) the tier 2 portion of the tax imposed by section 3221 (relating to tax on employ- ers) shall be treated as an employer con- tribution. (B) Tier 2 portion For purposes of subparagraph (A)— (i) After 1984 With respect to compensation paid after 1984, the tier 2 portion shall be the taxes imposed by sections 3201(b), 3211(b), and 3221(b). Page 472 TITLE 26—INTERNAL REVENUE CODE § 72 (ii) After September 30, 1981, and before 1985 With respect to compensation paid be- fore 1985 for services rendered after Sep- tember 30, 1981, the tier 2 portion shall be— (I) so much of the tax imposed by sec- tion 3201 as is determined at the 2 per- cent rate, and (II) so much of the taxes imposed by sections 3211 and 3221 as is determined at the 11.75 percent rate. With respect to compensation paid for services rendered after December 31, 1983, and before 1985, subclause (I) shall be ap- plied by substituting ‘‘2.75 percent’’ for ‘‘2 percent’’, and subclause (II) shall be ap- plied by substituting ‘‘12.75 percent’’ for ‘‘11.75 percent’’. (iii) Before October 1, 1981 With respect to compensation paid for services rendered during any period before October 1, 1981, the tier 2 portion shall be the excess (if any) of— (I) the tax imposed for such period by section 3201, 3211, or 3221, as the case may be (other than any tax imposed with respect to man-hours), over (II) the tax which would have been im- posed by such section for such period had the rates of the comparable taxes im- posed by chapter 21 for such period ap- plied under such section. (C) Contributions not allocable to supple- mental annuity or windfall benefits For purposes of paragraph (1), no amount treated as an employee contribution under this paragraph shall be allocated to— (i) any supplemental annuity paid under section 2(b) of the Railroad Retirement Act of 1974, or (ii) any benefit paid under section 3(h), 4(e), or 4(h) of such Act. (3) Tier 1 railroad retirement benefit For purposes of paragraph (1), the term ‘‘tier 1 railroad retirement benefit’’ has the mean- ing given such term by section 86(d)(4). (s) Required distributions where holder dies be- fore entire interest is distributed (1) In general A contract shall not be treated as an annu- ity contract for purposes of this title unless it provides that— (A) if any holder of such contract dies on or after the annuity starting date and before the entire interest in such contract has been distributed, the remaining portion of such interest will be distributed at least as rap- idly as under the method of distributions being used as of the date of his death, and (B) if any holder of such contract dies be- fore the annuity starting date, the entire in- terest in such contract will be distributed within 5 years after the death of such holder. (2) Exception for certain amounts payable over life of beneficiary If— (A) any portion of the holder’s interest is payable to (or for the benefit of) a des- ignated beneficiary, (B) such portion will be distributed (in ac- cordance with regulations) over the life of such designated beneficiary (or over a period not extending beyond the life expectancy of such beneficiary), and (C) such distributions begin not later than 1 year after the date of the holder’s death or such later date as the Secretary may by reg- ulations prescribe, then for purposes of paragraph (1), the portion referred to in subparagraph (A) shall be treat- ed as distributed on the day on which such dis- tributions begin. (3) Special rule where surviving spouse bene- ficiary If the designated beneficiary referred to in paragraph (2)(A) is the surviving spouse of the holder of the contract, paragraphs (1) and (2) shall be applied by treating such spouse as the holder of such contract. (4) Designated beneficiary For purposes of this subsection, the term ‘‘designated beneficiary’’ means any indi- vidual designated a beneficiary by the holder of the contract. (5) Exception for certain annuity contracts This subsection shall not apply to any annu- ity contract— (A) which is provided— (i) under a plan described in section 401(a) which includes a trust exempt from tax under section 501, or (ii) under a plan described in section 403(a), (B) which is described in section 403(b), (C) which is an individual retirement an- nuity or provided under an individual retire- ment account or annuity, or (D) which is a qualified funding asset (as defined in section 130(d), but without regard to whether there is a qualified assignment). (6) Special rule where holder is corporation or other non-individual (A) In general For purposes of this subsection, if the holder of the contract is not an individual, the primary annuitant shall be treated as the holder of the contract. (B) Primary annuitant For purposes of subparagraph (A), the term ‘‘primary annuitant’’ means the individual, the events in the life of whom are of primary importance in affecting the timing or amount of the payout under the contract. (7) Treatment of changes in primary annuitant where holder of contract is not an indi- vidual For purposes of this subsection, in the case of a holder of an annuity contract which is not an individual, if there is a change in a primary annuitant (as defined in paragraph (6)(B)), such change shall be treated as the death of the holder. Page 473 TITLE 26—INTERNAL REVENUE CODE § 72 3 So in original. Probably should refer to section 8336a. (t) 10-percent additional tax on early distribu- tions from qualified retirement plans (1) Imposition of additional tax If any taxpayer receives any amount from a qualified retirement plan (as defined in sec- tion 4974(c)), the taxpayer’s tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of such amount which is includible in gross in- come. (2) Subsection not to apply to certain distribu- tions Except as provided in paragraphs (3) and (4), paragraph (1) shall not apply to any of the fol- lowing distributions: (A) In general Distributions which are— (i) made on or after the date on which the employee attains age 591⁄2, (ii) made to a beneficiary (or to the es- tate of the employee) on or after the death of the employee, (iii) attributable to the employee’s being disabled within the meaning of subsection (m)(7), (iv) part of a series of substantially equal periodic payments (not less fre- quently than annually) made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of such employee and his designated bene- ficiary, (v) made to an employee after separation from service after attainment of age 55, (vi) dividends paid with respect to stock of a corporation which are described in section 404(k), (vii) made on account of a levy under section 6331 on the qualified retirement plan, (viii) payments under a phased retire- ment annuity under section 8366a(a)(5) 3 or 8412a(a)(5) of title 5, United States Code, or a composite retirement annuity under sec- tion 8366a(a)(1) 3 or 8412a(a)(1) of such title, or (ix) attributable to withdrawal of net in- come attributable to a contribution which is distributed pursuant to section 408(d)(4). For purposes of clause (iv), periodic payments shall not fail to be treated as substantially equal merely because they are amounts re- ceived as an annuity, and such periodic pay- ments shall be deemed to be substantially equal if they are payable over a period de- scribed in clause (iv) and satisfy the require- ments applicable to annuity payments under section 401(a)(9). (B) Medical expenses Distributions made to the employee (other than distributions described in subparagraph (A), (C), or (D)) to the extent such distribu- tions do not exceed the amount allowable as a deduction under section 213 to the em- ployee for amounts paid during the taxable year for medical care (determined without regard to whether the employee itemizes de- ductions for such taxable year). (C) Payments to alternate payees pursuant to qualified domestic relations orders Any distribution to an alternate payee pursuant to a qualified domestic relations order (within the meaning of section 414(p)(1)). (D) Distributions to unemployed individuals for health insurance premiums (i) In general Distributions from an individual retire- ment plan to an individual after separa- tion from employment— (I) if such individual has received un- employment compensation for 12 con- secutive weeks under any Federal or State unemployment compensation law by reason of such separation, (II) if such distributions are made dur- ing any taxable year during which such unemployment compensation is paid or the succeeding taxable year, and (III) to the extent such distributions do not exceed the amount paid during the taxable year for insurance described in section 213(d)(1)(D) with respect to the individual and the individual’s spouse and dependents (as defined in section 152, determined without regard to sub- sections (b)(1), (b)(2), and (d)(1)(B) there- of). (ii) Distributions after reemployment Clause (i) shall not apply to any distribu- tion made after the individual has been employed for at least 60 days after the sep- aration from employment to which clause (i) applies. (iii) Self-employed individuals To the extent provided in regulations, a self-employed individual shall be treated as meeting the requirements of clause (i)(I) if, under Federal or State law, the in- dividual would have received unemploy- ment compensation but for the fact the in- dividual was self-employed. (E) Distributions from individual retirement plans for higher education expenses Distributions to an individual from an in- dividual retirement plan to the extent such distributions do not exceed the qualified higher education expenses (as defined in paragraph (7)) of the taxpayer for the tax- able year. Distributions shall not be taken into account under the preceding sentence if such distributions are described in subpara- graph (A), (C), or (D) or to the extent para- graph (1) does not apply to such distribu- tions by reason of subparagraph (B). (F) Distributions from certain plans for first home purchases Distributions to an individual from an in- dividual retirement plan which are qualified first-time homebuyer distributions (as de- fined in paragraph (8)). Distributions shall not be taken into account under the pre- Page 474 TITLE 26—INTERNAL REVENUE CODE § 72 ceding sentence if such distributions are de- scribed in subparagraph (A), (C), (D), or (E) or to the extent paragraph (1) does not apply to such distributions by reason of subpara- graph (B). (G) Distributions from retirement plans to individuals called to active duty (i) In general Any qualified reservist distribution. (ii) Amount distributed may be repaid Any individual who receives a qualified reservist distribution may, at any time during the 2-year period beginning on the day after the end of the active duty period, make one or more contributions to an in- dividual retirement plan of such individual in an aggregate amount not to exceed the amount of such distribution. The dollar limitations otherwise applicable to con- tributions to individual retirement plans shall not apply to any contribution made pursuant to the preceding sentence. No de- duction shall be allowed for any contribu- tion pursuant to this clause. (iii) Qualified reservist distribution For purposes of this subparagraph, the term ‘‘qualified reservist distribution’’ means any distribution to an individual if— (I) such distribution is from an indi- vidual retirement plan, or from amounts attributable to employer contributions made pursuant to elective deferrals de- scribed in subparagraph (A) or (C) of sec- tion 402(g)(3) or section 501(c)(18)(D)(iii), (II) such individual was (by reason of being a member of a reserve component (as defined in section 101 of title 37, United States Code)) ordered or called to active duty for a period in excess of 179 days or for an indefinite period, and (III) such distribution is made during the period beginning on the date of such order or call and ending at the close of the active duty period. (iv) Application of subparagraph This subparagraph applies to individuals ordered or called to active duty after Sep- tember 11, 2001. In no event shall the 2- year period referred to in clause (ii) end before the date which is 2 years after the date of the enactment of this subpara- graph. (H) Distributions from retirement plans in case of birth of child or adoption (i) In general Any qualified birth or adoption distribu- tion. (ii) Limitation The aggregate amount which may be treated as qualified birth or adoption dis- tributions by any individual with respect to any birth or adoption shall not exceed $5,000. (iii) Qualified birth or adoption distribu- tion For purposes of this subparagraph— (I) In general The term ‘‘qualified birth or adoption distribution’’ means any distribution from an applicable eligible retirement plan to an individual if made during the 1-year period beginning on the date on which a child of the individual is born or on which the legal adoption by the indi- vidual of an eligible adoptee is finalized. (II) Eligible adoptee The term ‘‘eligible adoptee’’ means any individual (other than a child of the taxpayer’s spouse) who has not attained age 18 or is physically or mentally in- capable of self-support. (iv) Treatment of plan distributions (I) In general If a distribution to an individual would (without regard to clause (ii)) be a quali- fied birth or adoption distribution, a plan shall not be treated as failing to meet any requirement of this title mere- ly because the plan treats the distribu- tion as a qualified birth or adoption dis- tribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such indi- vidual exceeds $5,000. (II) Controlled group For purposes of subclause (I), the term ‘‘controlled group’’ means any group treated as a single employer under sub- section (b), (c), (m), or (o) of section 414. (v) Amount distributed may be repaid (I) In general Any individual who receives a qualified birth or adoption distribution may, at any time during the 3-year period begin- ning on the day after the date on which such distribution was received, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an applicable eligi- ble retirement plan of which such indi- vidual is a beneficiary and to which a rollover contribution of such distribu- tion could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), as the case may be. (II) Limitation on contributions to appli- cable eligible retirement plans other than IRAs The aggregate amount of contributions made by an individual under subclause (I) to any applicable eligible retirement plan which is not an individual retire- ment plan shall not exceed the aggregate amount of qualified birth or adoption distributions which are made from such plan to such individual. Subclause (I) shall not apply to contributions to any applicable eligible retirement plan which is not an individual retirement plan un- less the individual is eligible to make contributions (other than those de- Page 475 TITLE 26—INTERNAL REVENUE CODE § 72 scribed in subclause (I)) to such applica- ble eligible retirement plan. (III) Treatment of repayments of dis- tributions from applicable eligible re- tirement plans other than IRAs If a contribution is made under sub- clause (I) with respect to a qualified birth or adoption distribution from an applicable eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received such distribution in an eligible rollover distribution (as de- fined in section 402(c)(4)) and as having transferred the amount to the applicable eligible retirement plan in a direct trust- ee to trustee transfer within 60 days of the distribution. (IV) Treatment of repayments for dis- tributions from IRAs If a contribution is made under sub- clause (I) with respect to a qualified birth or adoption distribution from an individual retirement plan, then, to the extent of the amount of the contribu- tion, such distribution shall be treated as a distribution described in section 408(d)(3) and as having been transferred to the applicable eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution. (vi) Definition and special rules For purposes of this subparagraph— (I) Applicable eligible retirement plan The term ‘‘applicable eligible retire- ment plan’’ means an eligible retirement plan (as defined in section 402(c)(8)(B)) other than a defined benefit plan. (II) Exemption of distributions from trustee to trustee transfer and with- holding rules For purposes of sections 401(a)(31), 402(f), and 3405, a qualified birth or adop- tion distribution shall not be treated as an eligible rollover distribution. (III) Taxpayer must include TIN A distribution shall not be treated as a qualified birth or adoption distribution with respect to any child or eligible adoptee unless the taxpayer includes the name, age, and TIN of such child or eligi- ble adoptee on the taxpayer’s return of tax for the taxable year. (IV) Distributions treated as meeting plan distribution requirements Any qualified birth or adoption dis- tribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(i), 403(b)(11), and 457(d)(1)(A). (I) Distributions for certain emergency ex- penses (i) In general Any emergency personal expense dis- tribution. (ii) Annual limitation Not more than 1 distribution per cal- endar year may be treated as an emer- gency personal expense distribution by any individual. (iii) Dollar limitation The amount which may be treated as an emergency personal expense distribution by any individual in any calendar year shall not exceed the lesser of $1,000 or an amount equal to the excess of— (I) the individual’s total nonforfeitable accrued benefit under the plan (the indi- vidual’s total interest in the plan in the case of an individual retirement plan), determined as of the date of each such distribution, over (II) $1,000. (iv) Emergency personal expense distribu- tion For purposes of this subparagraph, the term ‘‘emergency personal expense dis- tribution’’ means any distribution from an applicable eligible retirement plan (as de- fined in subparagraph (H)(vi)(I)) to an indi- vidual for purposes of meeting unforesee- able or immediate financial needs relating to necessary personal or family emergency expenses. The administrator of an applica- ble eligible retirement plan may rely on an employee’s written certification that the employee satisfies the conditions of the preceding sentence in determining whether any distribution is an emergency personal expense distribution. The Secretary may provide by regulations for exceptions to the rule of the preceding sentence in cases where the plan administrator has actual knowledge to the contrary of the employ- ee’s certification, and for procedures for addressing cases of employee misrepresen- tation. (v) Treatment of plan distributions If a distribution to an individual would (without regard to clause (ii) or (iii)) be an emergency personal expense distribution, a plan shall not be treated as failing to meet any requirement of this title merely because the plan treats the distribution as an emergency personal expense distribu- tion, unless the number or the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer, determined as pro- vided in subparagraph (H)(iv)(II)) to such individual exceeds the limitation deter- mined under clause (ii) or (iii). (vi) Amount distributed may be repaid Rules similar to the rules of subpara- graph (H)(v) shall apply with respect to an individual who receives a distribution to which clause (i) applies. (vii) Limitation on subsequent distribu- tions If a distribution is treated as an emer- gency personal expense distribution in any Page 476 TITLE 26—INTERNAL REVENUE CODE § 72 calendar year with respect to a plan of the employee, no amount may be treated as such a distribution during the imme- diately following 3 calendar years with re- spect to such plan unless— (I) such previous distribution is fully repaid to such plan pursuant to clause (vi), or (II) the aggregate of the elective defer- rals and employee contributions to the plan (the total amounts contributed to the plan in the case of an individual re- tirement plan) subsequent to such pre- vious distribution is at least equal to the amount of such previous distribution which has not been so repaid. (viii) Special rules Rules similar to the rules of subclauses (II) and (IV) of subparagraph (H)(vi) shall apply to any emergency personal expense distribution. (J) Distributions from pension-linked emer- gency savings account Distributions from a pension-linked emer- gency savings account pursuant to section 402A(e). (K) Distribution from retirement plan in case of domestic abuse (i) In general Any eligible distribution to a domestic abuse victim. (ii) Limitation The aggregate amount which may be treated as an eligible distribution to a do- mestic abuse victim by any individual shall not exceed an amount equal to the lesser of— (I) $10,000, or (II) 50 percent of the present value of the nonforfeitable accrued benefit of the employee under the plan. (iii) Eligible distribution to a domestic abuse victim For purposes of this subparagraph— (I) In general A distribution shall be treated as an el- igible distribution to a domestic abuse victim if such distribution is from an ap- plicable eligible retirement plan and is made to an individual during the 1-year period beginning on any date on which the individual is a victim of domestic abuse by a spouse or domestic partner. (II) Domestic abuse The term ‘‘domestic abuse’’ means physical, psychological, sexual, emo- tional, or economic abuse, including ef- forts to control, isolate, humiliate, or in- timidate the victim, or to undermine the victim’s ability to reason independently, including by means of abuse of the vic- tim’s child or another family member living in the household. (iv) Treatment of plan distributions If a distribution to an individual would (without regard to clause (ii)) be an eligi- ble distribution to a domestic abuse vic- tim, a plan shall not be treated as failing to meet any requirement of this title merely because the plan treats the dis- tribution as an eligible distribution to a domestic abuse victim, unless the aggre- gate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer, determined as pro- vided in subparagraph (H)(iv)(II)) to such individual exceeds the limitation under clause (ii). (v) Amount distributed may be repaid Rules similar to the rules of subpara- graph (H)(v) shall apply with respect to an individual who receives a distribution to which clause (i) applies. (vi) Definition and special rules For purposes of this subparagraph: (I) Applicable eligible retirement plan The term ‘‘applicable eligible retire- ment plan’’ means an eligible retirement plan (as defined in section 402(c)(8)(B)) other than a defined benefit plan or a plan to which sections 401(a)(11) and 417 apply. (II) Exemption of distributions from trustee to trustee transfer and with- holding rules For purposes of sections 401(a)(31), 402(f), and 3405, an eligible distribution to a domestic abuse victim shall not be treated as an eligible rollover distribu- tion. (III) Distributions treated as meeting plan distribution requirements; self- certification Any distribution which the employee or participant certifies as being an eligi- ble distribution to a domestic abuse vic- tim shall be treated as meeting the re- quirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(i), 403(b)(11), and 457(d)(1)(A). (vii) Inflation adjustment In the case of a taxable year beginning in a calendar year after 2024, the $10,000 amount in clause (ii)(I) shall be increased 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 2023’’ for ‘‘calendar year 2016’’ in subparagraph (A)(ii) thereof. If any amount after adjustment under the preceding sentence is not a multiple of $100, such amount shall be rounded to the nearest multiple of $100. (L) Terminal illness (i) In general Distributions which are made to the em- ployee who is a terminally ill individual on or after the date on which such em- ployee has been certified by a physician as having a terminal illness. Page 477 TITLE 26—INTERNAL REVENUE CODE § 72 (ii) Definition For purposes of this subparagraph, the term ‘‘terminally ill individual’’ has the same meaning given such term under sec- tion 101(g)(4)(A), except that ‘‘84 months’’ shall be substituted for ‘‘24 months’’. (iii) Documentation For purposes of this subparagraph, an employee shall not be considered to be a terminally ill individual unless such em- ployee furnishes sufficient evidence to the plan administrator in such form and man- ner as the Secretary may require. (iv) Amount distributed may be repaid Rules similar to the rules of subpara- graph (H)(v) shall apply with respect to an individual who receives a distribution to which clause (i) applies. (M) Distributions from retirement plans in connection with federally declared disas- ters Any qualified disaster recovery distribu- tion. (3) Limitations (A) Certain exceptions not to apply to indi- vidual retirement plans Subparagraphs (A)(v) and (C) of paragraph (2) shall not apply to distributions from an individual retirement plan. (B) Periodic payments under qualified plans must begin after separation Paragraph (2)(A)(iv) shall not apply to any amount paid from a trust described in sec- tion 401(a) which is exempt from tax under section 501(a) or from a contract described in section 72(e)(5)(D)(ii) unless the series of payments begins after the employee sepa- rates from service. (4) Change in substantially equal payments (A) In general If— (i) paragraph (1) does not apply to a dis- tribution by reason of paragraph (2)(A)(iv), and (ii) the series of payments under such paragraph are subsequently modified (other than by reason of death or dis- ability or a distribution to which para- graph (10) applies)— (I) before the close of the 5-year period beginning with the date of the first pay- ment and after the employee attains age 591⁄2, or (II) before the employee attains age 591⁄2, the taxpayer’s tax for the 1st taxable year in which such modification occurs shall be in- creased by an amount, determined under regulations, equal to the tax which (but for paragraph (2)(A)(iv)) would have been im- posed, plus interest for the deferral period. (B) Deferral period For purposes of this paragraph, the term ‘‘deferral period’’ means the period begin- ning with the taxable year in which (without regard to paragraph (2)(A)(iv)) the distribu- tion would have been includible in gross in- come and ending with the taxable year in which the modification described in subpara- graph (A) occurs. (C) Rollovers to subsequent plan If— (i) payments described in paragraph (2)(A)(iv) are being made from a qualified retirement plan, (ii) a transfer or a rollover from such qualified retirement plan of all or a por- tion of the taxpayer’s benefit under the plan is made to another qualified retire- ment plan, and (iii) distributions from the transferor and transferee plans would in combination continue to satisfy the requirements of paragraph (2)(A)(iv) if they had been made only from the transferor plan, such transfer or rollover shall not be treated as a modification under subparagraph (A)(ii), and compliance with paragraph (2)(A)(iv) shall be determined on the basis of the com- bined distributions described in clause (iii). (5) Employee For purposes of this subsection, the term ‘‘employee’’ includes any participant, and in the case of an individual retirement plan, the individual for whose benefit such plan was es- tablished. (6) Special rules for simple retirement ac- counts (A) In general In the case of any amount received from a simple retirement account (within the mean- ing of section 408(p)) during the 2-year period beginning on the date such individual first participated in any qualified salary reduction arrangement maintained by the individual’s employer under section 408(p)(2), paragraph (1) shall be applied by substituting ‘‘25 percent’’ for ‘‘10 percent’’. (B) Waiver in case of plan conversion to 401(k) or 403(b) In the case of an employee of an employer which terminates the qualified salary reduc- tion arrangement of the employer under sec- tion 408(p) and establishes a qualified cash or deferred arrangement described in section 401(k) or purchases annuity contracts de- scribed in section 403(b), subparagraph (A) shall not apply to any amount which is paid in a rollover contribution described in sec- tion 408(d)(3) into a qualified trust under sec- tion 401(k) (but only if such contribution is subsequently subject to the rules of section 401(k)(2)(B)) or an annuity contract de- scribed in section 403(b) (but only if such contribution is subsequently subject to the rules of section 403(b)(12)) for the benefit of the employee. (7) Qualified higher education expenses For purposes of paragraph (2)(E)— (A) In general The term ‘‘qualified higher education ex- penses’’ means qualified higher education Page 478 TITLE 26—INTERNAL REVENUE CODE § 72 4 See References in Text note below. expenses (as defined in section 529(e)(3)) for education furnished to— (i) the taxpayer, (ii) the taxpayer’s spouse, or (iii) any child (as defined in section 152(f)(1)) or grandchild of the taxpayer or the taxpayer’s spouse, at an eligible educational institution (as de- fined in section 529(e)(5)). (B) Coordination with other benefits The amount of qualified higher education expenses for any taxable year shall be re- duced as provided in section 25A(g)(2). (8) Qualified first-time homebuyer distribu- tions For purposes of paragraph (2)(F)— (A) In general The term ‘‘qualified first-time homebuyer distribution’’ means any payment or dis- tribution received by an individual to the extent such payment or distribution is used by the individual before the close of the 120th day after the day on which such pay- ment or distribution is received to pay qualified acquisition costs with respect to a principal residence of a first-time home- buyer who is such individual, the spouse of such individual, or any child, grandchild, or ancestor of such individual or the individ- ual’s spouse. (B) Lifetime dollar limitation The aggregate amount of payments or dis- tributions received by an individual which may be treated as qualified first-time home- buyer distributions for any taxable year shall not exceed the excess (if any) of— (i) $10,000, over (ii) the aggregate amounts treated as qualified first-time homebuyer distribu- tions with respect to such individual for all prior taxable years. (C) Qualified acquisition costs For purposes of this paragraph, the term ‘‘qualified acquisition costs’’ means the costs of acquiring, constructing, or recon- structing a residence. Such term includes any usual or reasonable settlement, financ- ing, or other closing costs. (D) First-time homebuyer; other definitions For purposes of this paragraph— (i) First-time homebuyer The term ‘‘first-time homebuyer’’ means any individual if— (I) such individual (and if married, such individual’s spouse) had no present ownership interest in a principal resi- dence during the 2-year period ending on the date of acquisition of the principal residence to which this paragraph ap- plies, and (II) subsection (h) or (k) of section 1034 4 (as in effect on the day before the date of the enactment of this paragraph) did not suspend the running of any pe- riod of time specified in section 1034 4 (as so in effect) with respect to such indi- vidual on the day before the date the dis- tribution is applied pursuant to subpara- graph (A). (ii) Principal residence The term ‘‘principal residence’’ has the same meaning as when used in section 121. (iii) Date of acquisition The term ‘‘date of acquisition’’ means the date— (I) on which a binding contract to ac- quire the principal residence to which subparagraph (A) applies is entered into, or (II) on which construction or recon- struction of such a principal residence is commenced. (E) Special rule where delay in acquisition If any distribution from any individual re- tirement plan fails to meet the requirements of subparagraph (A) solely by reason of a delay or cancellation of the purchase or con- struction of the residence, the amount of the distribution may be contributed to an indi- vidual retirement plan as provided in section 408(d)(3)(A)(i) (determined by substituting ‘‘120th day’’ for ‘‘60th day’’ in such section), except that— (i) section 408(d)(3)(B) shall not be ap- plied to such contribution, and (ii) such amount shall not be taken into account in determining whether section 408(d)(3)(B) applies to any other amount. (F) Recontributions (i) General rule (I) In general Any individual who received a quali- fied distribution may, during the appli- cable period, make one or more contribu- tions in an aggregate amount not to ex- ceed the amount of such qualified dis- tribution to an eligible retirement plan (as defined in section 402(c)(8)(B)) of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), as the case may be. (II) Treatment of repayments Rules similar to the rules of clauses (ii) and (iii) of paragraph (11)(C) shall apply for purposes of this subsection. (ii) Qualified distribution For purposes of this subparagraph, the term ‘‘qualified distribution’’ means any distribution— (I) which is a qualified first-time homebuyer distribution, (II) which was to be used to purchase or construct a principal residence in a qualified disaster area, but which was not so used on account of the qualified disaster with respect to such area, and (III) which was received during the pe- riod beginning on the date which is 180 Page 479 TITLE 26—INTERNAL REVENUE CODE § 72 days before the first day of the incident period of such qualified disaster and end- ing on the date which is 30 days after the last day of such incident period. (iii) Applicable period For purposes of this subparagraph, the term ‘‘applicable period’’ means, in the case of a principal residence in a qualified disaster area with respect to any qualified disaster, the period beginning on the first day of the incident period of such qualified disaster and ending on the date which is 180 days after the applicable date with re- spect to such disaster. (9) Special rule for rollovers to section 457 plans For purposes of this subsection, a distribu- tion from an eligible deferred compensation plan (as defined in section 457(b)) of an eligible employer described in section 457(e)(1)(A) shall be treated as a distribution from a qualified retirement plan described in 4974(c)(1) to the extent that such distribution is attributable to an amount transferred to an eligible de- ferred compensation plan from a qualified re- tirement plan (as defined in section 4974(c)). (10) Distributions to qualified public safety em- ployees and private sector firefighters (A) In general In the case of a distribution to a qualified public safety employee from a governmental plan (within the meaning of section 414(d)) or a distribution from a plan described in clause (iii), (iv), or (vi) of section 402(c)(8)(B) to an employee who provides firefighting services, paragraph (2)(A)(v) shall be applied by substituting ‘‘age 50 or 25 years of service under the plan, whichever is earlier’’ for ‘‘age 55’’. (B) Qualified public safety employee For purposes of this paragraph, the term ‘‘qualified public safety employee’’ means— (i) any employee of a State or political subdivision of a State who provides police protection, firefighting services, emer- gency medical services, or services as a corrections officer or as a forensic security employee providing for the care, custody, and control of forensic patients for any area within the jurisdiction of such State or political subdivision, or (ii) any Federal law enforcement officer described in section 8331(20) or 8401(17) of title 5, United States Code, any Federal customs and border protection officer de- scribed in section 8331(31) or 8401(36) of such title, any Federal firefighter de- scribed in section 8331(21) or 8401(14) of such title, any air traffic controller de- scribed in 8331(30) or 8401(35) of such title, any nuclear materials courier described in section 8331(27) or 8401(33) of such title, any member of the United States Capitol Po- lice, any member of the Supreme Court Police, or any diplomatic security special agent of the Department of State. (11) Qualified disaster recovery distribution For purposes of paragraph (2)(M)— (A) In general Except as provided in subparagraph (B), the term ‘‘qualified disaster recovery dis- tribution’’ means any distribution made— (i) on or after the first day of the inci- dent period of a qualified disaster and be- fore the date that is 180 days after the ap- plicable date with respect to such disaster, and (ii) to an individual whose principal place of abode at any time during the inci- dent period of such qualified disaster is lo- cated in the qualified disaster area with respect to such qualified disaster and who has sustained an economic loss by reason of such qualified disaster. (B) Aggregate dollar limitation (i) In general For purposes of this subsection, the ag- gregate amount of distributions received by an individual which may be treated as qualified disaster recovery distributions with respect to any qualified disaster in all taxable years shall not exceed $22,000. (ii) Treatment of plan distributions If a distribution to an individual would (without regard to clause (i)) be a qualified disaster recovery distribution, a plan shall not be treated as violating any require- ment of this title merely because the plan treats such distribution as a qualified dis- aster recovery distribution, unless the ag- gregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $22,000 with respect to the same qualified disaster. (iii) Controlled group For purposes of clause (ii), the term ‘‘controlled group’’ means any group treat- ed as a single employer under subsection (b), (c), (m), or (o) of section 414. (C) Amount distributed may be repaid (i) In general Any individual who receives a qualified disaster recovery distribution may, at any time during the 3-year period beginning on the day after the date on which such dis- tribution was received, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such dis- tribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), as the case may be. (ii) Treatment of repayments of distribu- tions from eligible retirement plans other than IRAs For purposes of this title, if a contribu- tion is made pursuant to clause (i) with re- spect to a qualified disaster recovery dis- tribution from a plan other than an indi- vidual retirement plan, then the taxpayer shall, to the extent of the amount of the Page 480 TITLE 26—INTERNAL REVENUE CODE § 72 contribution, be treated as having received the qualified disaster recovery distribution in an eligible rollover distribution (as de- fined in section 402(c)(4)) and as having transferred the amount to the eligible re- tirement plan in a direct trustee to trustee transfer within 60 days of the distribution. (iii) Treatment of repayments for distribu- tions from IRAs For purposes of this title, if a contribu- tion is made pursuant to clause (i) with re- spect to a qualified disaster recovery dis- tribution from an individual retirement plan, then, to the extent of the amount of the contribution, the qualified disaster re- covery distribution shall be treated as a distribution described in section 408(d)(3) and as having been transferred to the eligi- ble retirement plan in a direct trustee to trustee transfer within 60 days of the dis- tribution. (D) Income inclusion spread over 3-year pe- riod (i) In general In the case of any qualified disaster re- covery distribution, unless the taxpayer elects not to have this subparagraph apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 3-taxable year period beginning with such taxable year. (ii) Special rule For purposes of clause (i), rules similar to the rules of subparagraph (E) of section 408A(d)(3) shall apply. (E) Qualified disaster For purposes of this paragraph and para- graph (8), the term ‘‘qualified disaster’’ means any disaster with respect to which a major disaster has been declared by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency As- sistance Act after December 27, 2020. (F) Other definitions For purposes of this paragraph and para- graph (8)— (i) Qualified disaster area (I) In general The term ‘‘qualified disaster area’’ means, with respect to any qualified dis- aster, the area with respect to which the major disaster was declared under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. (II) Exceptions Such term shall not include any area which is a qualified disaster area solely by reason of section 301 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020. (ii) Incident period The term ‘‘incident period’’ means, with respect to any qualified disaster, the pe- riod specified by the Federal Emergency Management Agency as the period during which such disaster occurred. (iii) Applicable date The term ‘‘applicable date’’ means the latest of— (I) the date of the enactment of this paragraph, (II) the first day of the incident period with respect to the qualified disaster, or (III) the date of the disaster declara- tion with respect to the qualified dis- aster. (iv) Eligible retirement plan The term ‘‘eligible retirement plan’’ shall have the meaning given such term by section 402(c)(8)(B). (G) Special rules (i) Exemption of distributions from trustee to trustee transfer and withholding rules For purposes of sections 401(a)(31), 402(f), and 3405, qualified disaster recovery dis- tributions shall not be treated as eligible rollover distributions. (ii) Qualified disaster recovery distribu- tions treated as meeting plan distribu- tion requirements For purposes of this title— (I) a qualified disaster recovery dis- tribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(i), 403(b)(11), and 457(d)(1)(A), and (II) in the case of a money purchase pension plan, a qualified disaster recov- ery distribution which is an in-service withdrawal shall be treated as meeting the requirements of section 401(a) appli- cable to distributions. (u) Treatment of annuity contracts not held by natural persons (1) In general If any annuity contract is held by a person who is not a natural person— (A) such contract shall not be treated as an annuity contract for purposes of this sub- title (other than subchapter L), and (B) the income on the contract for any tax- able year of the policyholder shall be treated as ordinary income received or accrued by the owner during such taxable year. For purposes of this paragraph, holding by a trust or other entity as an agent for a natural person shall not be taken into account. (2) Income on the contract (A) In general For purposes of paragraph (1), the term ‘‘income on the contract’’ means, with re- spect to any taxable year of the policy- holder, the excess of— (i) the sum of the net surrender value of the contract as of the close of the taxable year plus all distributions under the con- tract received during the taxable year or any prior taxable year, reduced by (ii) the sum of the amount of net pre- miums under the contract for the taxable Page 481 TITLE 26—INTERNAL REVENUE CODE § 72 year and prior taxable years and amounts includible in gross income for prior tax- able years with respect to such contract under this subsection. Where necessary to prevent the avoidance of this subsection, the Secretary may sub- stitute ‘‘fair market value of the contract’’ for ‘‘net surrender value of the contract’’ each place it appears in the preceding sen- tence. (B) Net premiums For purposes of this paragraph, the term ‘‘net premiums’’ means the amount of pre- miums paid under the contract reduced by any policyholder dividends. (3) Exceptions This subsection shall not apply to any annu- ity contract which— (A) is acquired by the estate of a decedent by reason of the death of the decedent, (B) is held under a plan described in sec- tion 401(a) or 403(a), under a program de- scribed in section 403(b), or under an indi- vidual retirement plan, (C) is a qualified funding asset (as defined in section 130(d), but without regard to whether there is a qualified assignment), (D) is purchased by an employer upon the termination of a plan described in section 401(a) or 403(a) and is held by the employer until all amounts under such contract are distributed to the employee for whom such contract was purchased or the employee’s beneficiary, or (E) is an immediate annuity. (4) Immediate annuity For purposes of this subsection, the term ‘‘immediate annuity’’ means an annuity— (A) which is purchased with a single pre- mium or annuity consideration, (B) the annuity starting date (as defined in subsection (c)(4)) of which commences no later than 1 year from the date of the pur- chase of the annuity, and (C) which provides for a series of substan- tially equal periodic payments (to be made not less frequently than annually) during the annuity period. (v) 10-percent additional tax for taxable distribu- tions from modified endowment contracts (1) Imposition of additional tax If any taxpayer receives any amount under a modified endowment contract (as defined in section 7702A), the taxpayer’s tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of such amount which is includible in gross in- come. (2) Subsection not to apply to certain distribu- tions Paragraph (1) shall not apply to any dis- tribution— (A) made on or after the date on which the taxpayer attains age 591⁄2, (B) which is attributable to the taxpayer’s becoming disabled (within the meaning of subsection (m)(7)), or (C) which is part of a series of substan- tially equal periodic payments (not less fre- quently than annually) made for the life (or life expectancy) of the taxpayer or the joint lives (or joint life expectancies) of such tax- payer and his beneficiary. (w) Application of basis rules to nonresident aliens (1) In general Notwithstanding any other provision of this section, for purposes of determining the por- tion of any distribution which is includible in gross income of a distributee who is a citizen or resident of the United States, the invest- ment in the contract shall not include any ap- plicable nontaxable contributions or applica- ble nontaxable earnings. (2) Applicable nontaxable contribution For purposes of this subsection, the term ‘‘applicable nontaxable contribution’’ means any employer or employee contribution— (A) which was made with respect to com- pensation— (i) for labor or personal services per- formed by an employee who, at the time the labor or services were performed, was a nonresident alien for purposes of the laws of the United States in effect at such time, and (ii) which is treated as from sources without the United States, and (B) which was not subject to income tax (and would have been subject to income tax if paid as cash compensation when the serv- ices were rendered) under the laws of the United States or any foreign country. (3) Applicable nontaxable earnings For purposes of this subsection, the term ‘‘applicable nontaxable earnings’’ means earn- ings— (A) which are paid or accrued with respect to any employer or employee contribution which was made with respect to compensa- tion for labor or personal services performed by an employee, (B) with respect to which the employee was at the time the earnings were paid or ac- crued a nonresident alien for purposes of the laws of the United States, and (C) which were not subject to income tax under the laws of the United States or any foreign country. (4) Regulations The Secretary shall prescribe such regula- tions as may be necessary to carry out the provisions of this subsection, including regula- tions treating contributions and earnings as not subject to tax under the laws of any for- eign country where appropriate to carry out the purposes of this subsection. (x) Cross reference For limitation on adjustments to basis of annuity contracts sold, see section 1021. (Aug. 16, 1954, ch. 736, 68A Stat. 20; Pub. L. 87–792, § 4(a), (b), Oct. 10, 1962, 76 Stat. 821; Pub. L. 87–834, § 11(b), Oct. 16, 1962, 76 Stat. 1005; Pub. L. 88–272, title II, § 232(b), Feb. 26, 1964, 78 Stat. 110; Page 482 TITLE 26—INTERNAL REVENUE CODE § 72 Pub. L. 89–44, title VIII, § 809(d)(2), June 21, 1965, 79 Stat. 167; Pub. L. 89–97, title I, § 106(d)(2), July 30, 1965, 79 Stat. 337; Pub. L. 89–365, § 1(b), Mar. 8, 1966, 80 Stat. 32; Pub. L. 91–172, title V, § 515(b), Dec. 30, 1969, 83 Stat. 644; Pub. L. 93–406, title II, §§ 2001(e)(5), (g)(1), (2)(A), (h)(2), (3), 2002(g)(10), 2005(c)(3), 2007(b)(2), Sept. 2, 1974, 88 Stat. 955, 957, 970, 991, 994; Pub. L. 94–455, title XIX, §§ 1901(a)(12), (13), 1906(b)(13)(A), 1951(b)(1)(A), Oct. 4, 1976, 90 Stat. 1765, 1834, 1836; Pub. L. 97–34, title III, §§ 311(b)(1), 312(d), (e)(1), Aug. 13, 1981, 95 Stat. 278, 284; Pub. L. 97–248, title II, §§ 236(a), (b), 237(d), 265(a), (b)(1), Sept. 3, 1982, 96 Stat. 509–511, 544–546; Pub. L. 97–448, title I, § 103(c)(3)(B)(i), (6), Jan. 12, 1983, 96 Stat. 2376; Pub. L. 98–76, title II, § 224(a), Aug. 12, 1983, 97 Stat. 421; Pub. L. 98–369, div. A, title II, §§ 211(b)(1), 222(a), (b), title IV, §§ 421(b)(1), 491(d)(3), (4), title V, §§ 521(d), 523(a), (b), title VII, § 713(b)(1)–(c)(1)(B), (d)(1), July 18, 1984, 98 Stat. 754, 774, 794, 849, 868, 871, 872, 956, 957; Pub. L. 98–397, title II, § 204(c)(2), Aug. 23, 1984, 98 Stat. 1448; Pub. L. 99–514, title XI, §§ 1101(b)(2)(B), (C), 1122(c), 1123(a), (b), (d)(1), 1134(a)–(d), 1135(a), title XVIII, §§ 1826(a), (b)(1)–(3), (c), (d), 1852(a)(2), (c)(1)–(4), 1854(b)(1), 1898(c)(1)(B), Oct. 22, 1986, 100 Stat. 2413, 2414, 2467, 2472, 2474, 2475, 2483, 2484, 2848–2850, 2864, 2867, 2878, 2951; Pub. L. 100–647, title I, §§ 1011A(b)(1)(A), (B), (2), (9), (c)(1)–(8), (h), (i), 1018(k), (t)(1)(A), (B), (u)(8), title V, § 5012(a), (b)(1), (d), Nov. 10, 1988, 102 Stat. 3472, 3474–3476, 3482, 3583, 3587, 3590, 3661, 3662, 3664; Pub. L. 101–239, title VII, §§ 7811(m)(4), 7815(a)(3), (5), Dec. 19, 1989, 103 Stat. 2412, 2414; Pub. L. 101–508, title XI, § 11802(a), Nov. 5, 1990, 104 Stat. 1388–529; Pub. L. 102–318, title V, § 521(b)(3), July 3, 1992, 106 Stat. 310; Pub. L. 104–188, title I, §§ 1403(a), 1421(b)(4)(A), 1463(a), 1704(l)(1), (t)(2), (77), Aug. 20, 1996, 110 Stat. 1790, 1796, 1824, 1882, 1887, 1891; Pub. L. 104–191, title III, § 361(a)–(c), Aug. 21, 1996, 110 Stat. 2071, 2072; Pub. L. 105–34, title II, § 203(a), (b), title III, § 303(a), (b), title X, § 1075(a), (b), Aug. 5, 1997, 111 Stat. 809, 829, 949; Pub. L. 105–206, title III, § 3436(a), title VI, §§ 6004(d)(3)(B), 6005(c)(1), 6023(3), (4), July 22, 1998, 112 Stat. 761, 794, 800, 824; Pub. L. 107–16, title IV, § 402(a)(4)(A), (B), title VI, §§ 632(a)(3)(A), 641(a)(2)(C), (e)(1), June 7, 2001, 115 Stat. 60, 61, 113, 120; Pub. L. 107–22, § 1(b)(1)(A), (3)(A), July 26, 2001, 115 Stat. 196, 197; Pub. L. 107–90, title II, § 204(e)(2), Dec. 21, 2001, 115 Stat. 893; Pub. L. 108–311, title II, § 207(6), (7), title IV, § 408(a)(4), (b)(3), Oct. 4, 2004, 118 Stat. 1177, 1191, 1192; Pub. L. 108–357, title VIII, § 906(a), Oct. 22, 2004, 118 Stat. 1653; Pub. L. 109–280, title VIII, §§ 827(a), 828(a), 844(a), Aug. 17, 2006, 120 Stat. 999, 1001, 1010; Pub. L. 110–245, title I, § 107(a), June 17, 2008, 122 Stat. 1631; Pub. L. 110–458, title I, § 108(e), Dec. 23, 2008, 122 Stat. 5109; Pub. L. 111–240, title II, § 2113(a), Sept. 27, 2010, 124 Stat. 2566; Pub. L. 112–141, div. F, title I, § 100121(c), July 6, 2012, 126 Stat. 914; Pub. L. 113–295, div. A, title II, § 221(a)(14), Dec. 19, 2014, 128 Stat. 4039; Pub. L. 114–26, § 2(a)–(c), June 29, 2015, 129 Stat. 319; Pub. L. 114–113, div. Q, title III, § 308(a), Dec. 18, 2015, 129 Stat. 3089; Pub. L. 116–94, div. O, title I, §§ 108(a), 113(a), Dec. 20, 2019, 133 Stat. 3149, 3154; Pub. L. 117–328, div. T, title I, §§ 115(a), 127(e)(2), (3), title III, §§ 308(a), (b), 311(a), 314(a), 323(a), (b), (d), 326(a), 329(a), 330(a), 331(a)(1), (2), (b)(1), (c)(1), 332(b)(1), 333(a), 334(c), title IV, § 401(b)(1), Dec. 29, 2022, 136 Stat. 5296, 5329, 5345, 5347, 5349, 5356, 5357, 5359–5361, 5364, 5365, 5367, 5368, 5370, 5388.) 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. AMENDMENT OF SUBSECTION (t)(2) Pub. L. 117–328, div. T, title III, § 334(c), (e), Dec. 29, 2022, 136 Stat. 5370, 5372, provided that, applicable to distributions made after the date which is 3 years after Dec. 29, 2022, subsection (t)(2) of this section is amended by adding at the end the following new subparagraph: ‘‘(N) Qualified long-term care distributions ‘‘(i) In general ‘‘Any qualified long-term care distribution to which section 401(a)(39) applies. ‘‘(ii) Exception ‘‘If, with respect to the plan, the individual covered by the long-term care coverage to which such distribution relates is the spouse of the employee, clause (i) shall apply only if the employee and the employee’s spouse file a joint return. ‘‘(iii) Exemption of distributions from trustee to trustee transfer and withholding rules ‘‘For purposes of sections 401(a)(31), 402(f), and 3405, any qualified long-term care dis- tribution described in clause (i) shall not be treated as an eligible rollover distribution.’’. See 2022 Amendment note below. Editorial Notes REFERENCES IN TEXT The enactment of the Economic Growth and Tax Re- lief Reconciliation Act of 2001, referred to in subsec. (f), means the enactment of Pub. L. 107–16, which was ap- proved June 7, 2001. The date of the enactment of the Small Business Job Protection Act of 1996, referred to in subsec. (n), is the date of enactment of Pub. L. 104–188, which was ap- proved Aug. 20, 1996. The Railroad Retirement Act of 1974, referred to in subsec. (r)(1), (2)(C)(i), (ii), is act Aug. 29, 1935, ch. 812, as amended generally by Pub. L. 93–445, title I, § 101, Oct. 16, 1974, 88 Stat. 1305, which is classified generally to subchapter IV (§ 231 et seq.) of chapter 9 of Title 45, Railroads. Sections 2(b), 3(h), and 4(e) and (h) of the Act are classified to sections 231a(b), 231b(h), and 231c(e) and (h), respectively, of Title 45. For further details and complete classification of this Act to the Code, see Codification note set out preceding section 231 of Title 45, section 231t of Title 45, and Tables. The date of the enactment of this subparagraph, re- ferred to in subsec. (t)(2)(G)(iv), is the date of enact- ment of Pub. L. 109–280, which was approved Aug. 17, 2006. Section 1034 (as in effect on the day before the date of the enactment of this paragraph), referred to in sub- sec. (t)(8)(D)(i)(II), means section 1034 of this title as in effect on the day before Aug. 5, 1997. Section 1034 was repealed by Pub. L. 105–34, title III, § 312(b), Aug. 5, 1997, 111 Stat. 839. The Robert T. Stafford Disaster Relief and Emer- gency Assistance Act, referred to in subsec. (t)(11)(E), (F)(i)(I), is Pub. L. 93–288, May 22, 1974, 88 Stat. 143, which is classified principally to chapter 68 (§ 5121 et seq.) of Title 42, The Public Health and Welfare. Sec- tion 401 of the Act is classified to section 5170 of Title 42. For complete classification of this Act to the Code, Page 483 TITLE 26—INTERNAL REVENUE CODE § 72 see Short Title note set out under section 5121 of Title 42 and Tables. Section 301 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, referred to in subsec. (t)(11)(F)(i)(II), is section 301 of Pub. L. 116–260, div. EE, title III, Dec. 27, 2020, 134 Stat. 3070, which is not classi- fied to the Code. The date of the enactment of this paragraph, referred to in subsec. (t)(11)(F)(iii)(I), is the date of enactment of Pub. L. 117–328, which was approved Dec. 29, 2022. AMENDMENTS 2022—Subsec. (d)(3). Pub. L. 117–328, § 127(e)(3), added par. (3). Subsec. (p)(6). Pub. L. 117–328, § 331(c)(1), added par. (6). Subsec. (q)(2). Pub. L. 117–328, § 323(d)(2), added con- cluding provisions. Subsec. (q)(3). Pub. L. 117–328, § 323(b), designated ex- isting provisions as subpar. (A) and inserted heading, redesignated former subpars. (A) and (B) as cls. (i) and (ii), respectively, of subpar. (A), and cls. (i) and (ii) of former subpar. (B) as subcls. (I) and (II), respectively, of cl. (ii), and added subpar. (B). Subsec. (t)(2)(A). Pub. L. 117–328, § 323(d)(1), added con- cluding provisions. Subsec. (t)(2)(A)(ix). Pub. L. 117–328, § 333(a), added cl. (ix). Subsec. (t)(2)(H)(v)(I). Pub. L. 117–328, § 311(a), sub- stituted ‘‘may, at any time during the 3-year period be- ginning on the day after the date on which such dis- tribution was received, make’’ for ‘‘may make’’. Subsec. (t)(2)(H)(vi)(IV). Pub. L. 117–328, § 401(b)(1), substituted ‘‘403(b)(7)(A)(i)’’ for ‘‘403(b)(7)(A)(ii)’’. Subsec. (t)(2)(I). Pub. L. 117–328, § 115(a), added subpar. (I). Subsec. (t)(2)(J). Pub. L. 117–328, § 127(e)(2), added sub- par. (J). Subsec. (t)(2)(K). Pub. L. 117–328, § 314(a), added sub- par. (K). Subsec. (t)(2)(L). Pub. L. 117–328, § 326(a), added sub- par. (L). Subsec. (t)(2)(M). Pub. L. 117–328, § 331(a)(1), added subpar. (M). Subsec. (t)(2)(N). Pub. L. 117–328, § 334(c), added sub- par. (N). Subsec. (t)(4)(C). Pub. L. 117–328, § 323(a), added sub- par. (C). Subsec. (t)(6). Pub. L. 117–328, § 332(b)(1), designated existing provisions as subpar. (A), inserted heading, and added subpar. (B). Subsec. (t)(8)(F). Pub. L. 117–328, § 331(b)(1), added sub- par. (F). Subsec. (t)(10). Pub. L. 117–328, § 308(b), substituted ‘‘and private sector firefighters’’ for ‘‘in governmental plans’’ in heading. Subsec. (t)(10)(A). Pub. L. 117–328, § 329(a), substituted ‘‘age 50 or 25 years of service under the plan, whichever is earlier’’ for ‘‘age 50’’. Pub. L. 117–328, § 308(a), substituted ‘‘414(d)) or a dis- tribution from a plan described in clause (iii), (iv), or (vi) of section 402(c)(8)(B) to an employee who provides firefighting services’’ for ‘‘414(d))’’. Subsec. (t)(10)(B)(i). Pub. L. 117–328, § 330(a), sub- stituted ‘‘emergency medical services, or services as a corrections officer or as a forensic security employee providing for the care, custody, and control of forensic patients’’ for ‘‘or emergency medical services’’. Subsec. (t)(11). Pub. L. 117–328, § 331(a)(2), added par. (11). 2019—Subsec. (p)(2)(D), (E). Pub. L. 116–94, § 108(a), added subpar. (D) and redesignated former subpar. (D) as (E). Subsec. (t)(2)(H). Pub. L. 116–94, § 113(a), added subpar. (H). 2015—Subsec. (t)(4)(A)(ii). Pub. L. 114–26, § 2(c), in- serted ‘‘or a distribution to which paragraph (10) ap- plies’’ after ‘‘other than by reason of death or dis- ability’’ in introductory provisions. Subsec. (t)(10)(A). Pub. L. 114–26, § 2(b), struck out ‘‘which is a defined benefit plan’’ after ‘‘section 414(d))’’. Subsec. (t)(10)(B). Pub. L. 114–26, § 2(a), substituted ‘‘means—’’ for ‘‘means’’, designated remainder of exist- ing provisions as cl. (i), and added cl. (ii). Subsec. (t)(10)(B)(ii). Pub. L. 114–113 substituted ‘‘any air traffic controller’’ for ‘‘or any air traffic con- troller’’ and inserted before period at end ‘‘, any nu- clear materials courier described in section 8331(27) or 8401(33) of such title, any member of the United States Capitol Police, any member of the Supreme Court Po- lice, or any diplomatic security special agent of the De- partment of State’’. 2014—Subsec. (c)(4). Pub. L. 113–295, § 221(a)(14)(A), struck out ‘‘; except that if such date was before Janu- ary 1, 1954, then the annuity starting date is January 1, 1954’’ before period at end. Subsec. (g)(3). Pub. L. 113–295, § 221(a)(14)(B), struck out ‘‘January 1, 1954, or’’ before ‘‘the first day’’. Pub. L. 113–295, § 221(a)(14)(B), which directed striking out ‘‘, whichever is later’’, was executed by striking out ‘‘, whichever is the later’’ after ‘‘as an annuity’’ to reflect the probable intent of Congress. 2012—Subsec. (t)(2)(A)(viii). Pub. L. 112–141 added cl. (viii). 2010—Subsec. (a). Pub. L. 111–240 amended subsec. (a) generally. Prior to amendment, text read as follows: ‘‘Except as otherwise provided in this chapter, gross in- come includes any amount received as an annuity (whether for a period certain or during one or more lives) under an annuity, endowment, or life insurance contract.’’ 2008—Subsec. (t)(2)(G)(iv). Pub. L. 110–245, which di- rected amendment by striking out ‘‘, and before De- cember 31, 2007’’ after ‘‘September 11, 2001’’, was exe- cuted by striking out ‘‘, and on or before December 31, 2007’’ after ‘‘September 11, 2001’’, to reflect the probable intent of Congress and the intervening amendment by Pub. L. 110–458. See Amendment note and Effective Date of 2008 Amendment note below. Pub. L. 110–458 inserted ‘‘on or’’ before ‘‘before’’ in first sentence. 2006—Subsec. (e)(11), (12). Pub. L. 109–280, § 844(a), added par. (11) and redesignated former par. (11) as (12). Subsec. (t)(2)(G). Pub. L. 109–280, § 827(a), added sub- par. (G). Subsec. (t)(10). Pub. L. 109–280, § 828(a), added par. (10). 2004—Subsec. (e)(9). Pub. L. 108–311, § 408(b)(3), amend- ed Pub. L. 107–22, § 1(b)(3)(A). See 2001 Amendment note below. Subsec. (f). Pub. L. 108–311, § 408(a)(4), substituted ‘‘Economic Growth and Tax Relief Reconciliation Act of 2001)’’ for ‘‘Economic Growth and Tax Relief Rec- onciliation Act of 2001’’ in concluding provisions. Subsec. (t)(2)(D)(i)(III). Pub. L. 108–311, § 207(6), in- serted ‘‘, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof’’ after ‘‘section 152’’. Subsec. (t)(7)(A)(iii). Pub. L. 108–311, § 207(7), sub- stituted ‘‘152(f)(1)’’ for ‘‘151(c)(3)’’. Subsecs. (w), (x). Pub. L. 108–357 added subsec. (w) and redesignated former subsec. (w) as (x). 2001—Subsec. (e)(9). Pub. L. 107–22, § 1(b)(3)(A), as amended by Pub. L. 108–311, § 408(b)(3), substituted ‘‘Coverdell education savings’’ for ‘‘educational indi- vidual retirement’’ in heading. Pub. L. 107–22, § 1(b)(1)(A), substituted ‘‘a Coverdell education savings’’ for ‘‘an education individual retire- ment’’. Pub. L. 107–16, § 402(a)(4)(A), (B), substituted ‘‘quali- fied tuition’’ for ‘‘qualified State tuition’’ in heading and text. Subsec. (f). Pub. L. 107–16, § 632(a)(3)(A), substituted ‘‘section 403(b)(2)(D)(iii), as in effect before the enact- ment of the Economic Growth and Tax Relief Rec- onciliation Act of 2001’’ for ‘‘section 403(b)(2)(D)(iii))’’ in concluding provisions. Subsec. (o)(4). Pub. L. 107–16, § 641(e)(1), substituted ‘‘403(b)(8), 408(d)(3), and 457(e)(16)’’ for ‘‘and 408(d)(3)’’. Subsec. (r)(2)(B)(i). Pub. L. 107–90 substituted ‘‘3211(b)’’ for ‘‘3211(a)(2)’’. Subsec. (t)(9). Pub. L. 107–16, § 641(a)(2)(C), added par. (9). Page 484 TITLE 26—INTERNAL REVENUE CODE § 72 1998—Subsec. (e)(9). Pub. L. 105–206, § 6004(d)(3)(B), added par. (9). Subsec. (n). Pub. L. 105–206, § 6023(3), inserted ‘‘(as in effect on the day before the date of the enactment of the Small Business Job Protection Act of 1996)’’ after ‘‘section 101(b)(2)(D)’’. Subsec. (t)(2)(A)(iv). Pub. L. 105–206, § 3436(a), which directed amendment of cl. (iv) by striking out ‘‘or’’ at end, could not be executed because the word ‘‘or’’ did not appear at end. Subsec. (t)(2)(A)(vii). Pub. L. 105–206, § 3436(a), added cl. (vii). Subsec. (t)(3)(A). Pub. L. 105–206, § 6023(4), substituted ‘‘(A)(v)’’ for ‘‘(A)(v),’’. Subsec. (t)(8)(E). Pub. L. 105–206, § 6005(c)(1), in intro- ductory provisions, substituted ‘‘120th day’’ for ‘‘120 days’’ and ‘‘60th day’’ for ‘‘60 days’’. 1997—Subsec. (d)(1)(B)(iii). Pub. L. 105–34, § 1075(b), in- serted ‘‘If the annuity is payable over the life of a sin- gle individual, the number of anticipated payments shall be determined as follows:’’ before table and struck out ‘‘primary’’ after ‘‘If the age of the’’ in table. Subsec. (d)(1)(B)(iv). Pub. L. 105–34, § 1075(a), added cl. (iv). Subsec. (t)(2)(E). Pub. L. 105–34, § 203(a), added subpar. (E). Subsec. (t)(2)(F). Pub. L. 105–34, § 303(a), added subpar. (F). Subsec. (t)(7). Pub. L. 105–34, § 203(b), added par. (7). Subsec. (t)(8). Pub. L. 105–34, § 303(b), added par. (8). 1996—Subsec. (b)(4)(A). Pub. L. 104–188, § 1704(l)(1), in- serted ‘‘(determined without regard to subsection (c)(2))’’ after ‘‘contract’’. Subsec. (d). Pub. L. 104–188, § 1403(a), amended subsec. (d) generally. Prior to amendment, subsec. (d) read as follows: ‘‘TREATMENT OF EMPLOYEE CONTRIBUTIONS UNDER DEFINED CONTRIBUTION PLANS AS SEPARATE CON- TRACTS.—For purposes of this section, employee con- tributions (and any income allocable thereto) under a defined contribution plan may be treated as a separate contract.’’ Subsec. (f). Pub. L. 104–188, § 1463(a), in closing provi- sions, inserted before period at end ‘‘, or to the extent such credits are attributable to services performed as a foreign missionary (within the meaning of section 403(b)(2)(D)(iii))’’. Subsec. (m)(2)(A) to (C). Pub. L. 104–188, § 1704(t)(2), inserted ‘‘and’’ at end of subpar. (A), redesignated sub- par. (C) as (B), and struck out former subpar. (B) which read as follows: ‘‘the consideration for the contract contributed by the employee for purposes of subsection (d)(1) (relating to employee’s contributions recoverable in 3 years) and subsection (e)(7) (relating to plans where substantially all contributions are employee contribu- tions), and’’. Subsec. (p)(4)(A)(ii). Pub. L. 104–188, § 1704(t)(77), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: ‘‘SPECIAL RULES.—The term ‘qualified employer plan’— ‘‘(I) shall include any plan which was (or was deter- mined to be) a qualified employer plan or a govern- ment plan, but ‘‘(II) shall not include a plan described in sub- section (e)(7).’’ Subsec. (t)(2)(B). Pub. L. 104–191, § 361(c), substituted ‘‘, (C), or (D)’’ for ‘‘or (C)’’. Subsec. (t)(2)(D). Pub. L. 104–191, § 361(b), added sub- par. (D). Subsec. (t)(3)(A). Pub. L. 104–191, § 361(a), struck out ‘‘(B),’’ after ‘‘Subparagraphs (A)(v),’’. Subsec. (t)(6). Pub. L. 104–188, § 1421(b)(4)(A), added par. (6). 1992—Subsec. (o)(4). Pub. L. 102–318 substituted ‘‘402(c)’’ for ‘‘402(a)(5), 402(a)(7)’’. 1990—Subsec. (t)(2)(C), (D). Pub. L. 101–508, § 11802(a)(1), (2), redesignated subpar. (D) as (C) and struck out former subpar. (C) ‘‘Exceptions for distribu- tions from employee stock ownership plans’’ which read as follows: ‘‘Any distribution made before January 1, 1990, to an employee from an employee stock owner- ship plan (as defined in section 4975(e)(7)) or a tax cred- it employee stock ownership plan (as defined in section 409) if— ‘‘(i) such distribution is attributable to assets which have been invested in employer securities (within the meaning of section 409(l)) at all times dur- ing the 5-plan-year period preceding the plan year in which the distribution is made, and ‘‘(ii) at all times during such period the require- ments of sections 401(a)(28) and 409 (as in effect at such times) are met with respect to such employer se- curities.’’ Subsec. (t)(3)(A). Pub. L. 101–508, § 11802(a)(3), sub- stituted ‘‘and (C)’’ for ‘‘(C), and (D)’’. 1989—Subsec. (e)(11)(A). Pub. L. 101–239, § 7815(a)(3), (5), substituted ‘‘calendar year’’ for ‘‘12-month period’’ in cls. (i) and (ii), and inserted at end ‘‘The preceding sentence shall not apply to any contract described in paragraph (5)(D).’’ Subsec. (q)(2)(B). Pub. L. 101–239, § 7811(m)(4), inserted an additional closing parenthesis after ‘‘subsection (s)(6)(B))’’. 1988—Subsec. (d). Pub. L. 100–647, § 1011A(b)(2)(A), added subsec. (d). Subsec. (e)(4)(A). Pub. L. 100–647, § 5012(d)(1), inserted at end ‘‘The preceding sentence shall not apply for pur- poses of determining investment in the contract, ex- cept that the investment in the contract shall be in- creased by any amount included in gross income by reason of the amount treated as received under the pre- ceding sentence.’’ Subsec. (e)(5)(C). Pub. L. 100–647, § 5012(a)(2), sub- stituted ‘‘Except as provided in paragraph (10) and ex- cept to the extent’’ for ‘‘Except to the extent’’. Subsec. (e)(5)(D). Pub. L. 100–647, § 1011A(b)(9)(B), sub- stituted ‘‘paragraph (8)’’ for ‘‘paragraphs (7) and (8)’’. Subsec. (e)(7). Pub. L. 100–647, § 1011A(b)(9)(A), struck out par. (7) which related to special rules for plans where substantially all contributions are employee contributions. Subsec. (e)(8)(A). Pub. L. 100–647, § 1011A(b)(9)(C), struck out ‘‘(other than paragraph (7))’’ after ‘‘this sub- section’’. Subsec. (e)(9). Pub. L. 100–647, § 1011A(b)(2)(B), struck out par. (9) which related to treatment of employee contributions as separate contract. Subsec. (e)(10). Pub. L. 100–647, § 5012(a)(1), added par. (10). Subsec. (e)(11). Pub. L. 100–647, § 5012(d)(2), added par. (11). Subsec. (f). Pub. L. 100–647, § 1011A(b)(1)(A), struck out ‘‘for purposes of subsections (d)(1) and (e)(7), the consid- eration for the contract contributed by the employee,’’ after ‘‘contract,’’ in introductory provisions. Subsec. (n). Pub. L. 100–647, § 1011A(b)(1)(B), sub- stituted ‘‘Subsection (b)’’ for ‘‘Subsections (b) and (d)’’. Subsec. (o)(2). Pub. L. 100–647, § 1011A(c)(8), struck out par. (2) which related to additional tax if amount re- ceived before age 591⁄2. Subsec. (p)(3)(A). Pub. L. 100–647, § 1011A(h)(1), in- serted ‘‘to which paragraph (1) does not apply by reason of paragraph (2) during the period’’ after ‘‘loan’’. Subsec. (p)(3)(B). Pub. L. 100–647, § 1011A(h)(2), sub- stituted ‘‘Period’’ for ‘‘Loans’’ in heading and amended text generally. Prior to amendment, text read as fol- lows: ‘‘For purposes of subparagraph (A), a loan is de- scribed in this subparagraph— ‘‘(i) if paragraph (1) does not apply to such loan by reason of paragraph (2), and ‘‘(ii) if— ‘‘(I) such loan is made to a key employee (as de- fined in section 416(i)), or ‘‘(II) such loan is secured by amounts attributable to elective 401(k) or 403(b) deferrals (as defined in section 402(g)(3)).’’ Subsec. (q)(2)(B). Pub. L. 100–647, § 1018(t)(1)(B), sub- stituted ‘‘subsection (s)(6)(B))’’ for ‘‘subsection (s)(6)(B)))’’. Subsec. (q)(2)(D). Pub. L. 100–647, § 1011A(c)(7), in- serted ‘‘designated’’ before ‘‘beneficiary’’. Page 485 TITLE 26—INTERNAL REVENUE CODE § 72 Pub. L. 100–647, §§ 1011A(c)(4), 1018(u)(8), amended sub- par. (D) identically, substituting a comma for period at end. Subsec. (q)(2)(E). Pub. L. 100–647, § 1011A(b)(9)(D), struck out ‘‘(determined without regard to subsection (e)(7))’’ after ‘‘subsection (e)(5)(D)’’. Subsec. (q)(2)(G). Pub. L. 100–647, § 1011A(c)(4), sub- stituted a comma for period at end. Subsec. (q)(2)(H). Pub. L. 100–647, § 1011A(c)(6), added subpar. (H). Subsec. (q)(3)(B). Pub. L. 100–647, § 1011A(c)(5), sub- stituted ‘‘taxpayer’’ for ‘‘employee’’ in cls. (i) and (ii). Subsec. (s)(5). Pub. L. 100–647, § 1018(k)(2), substituted ‘‘certain annuity contracts’’ for ‘‘annuity contracts which are part of qualified plans’’ in heading. Subsec. (s)(5)(D). Pub. L. 100–647, § 1018(k)(1), added subpar. (D). Subsec. (s)(7). Pub. L. 100–647, § 1018(t)(1)(A), sub- stituted ‘‘primary annuitant’’ for ‘‘primary annuity’’. Subsec. (t)(2)(A)(iv). Pub. L. 100–647, § 1011A(c)(7), in- serted ‘‘designated’’ before ‘‘beneficiary’’. Subsec. (t)(2)(A)(v). Pub. L. 100–647, § 1011A(c)(1), struck out ‘‘on account of early retirement under the plan’’ after ‘‘separation from service’’. Subsec. (t)(2)(C). Pub. L. 100–647, § 1011A(c)(2), sub- stituted ‘‘Exceptions for distributions from employee stock ownership plans’’ for ‘‘Certain plans’’ in heading and amended text generally. Prior to amendment, text read as follows: ‘‘(i) IN GENERAL.—Except as provided in clause (ii), any distribution made before January 1, 1990, to an em- ployee from an employee stock ownership plan defined in section 4975(e)(7) to the extent that, on average, a majority of assets in the plan have been invested in em- ployer securities (as defined in section 409(l)) for the 5- plan-year period preceding the plan year in which the distribution is made. ‘‘(ii) BENEFITS DISTRIBUTED MUST BE INVESTED IN EM- PLOYER SECURITIES FOR 5 YEARS.—Clause (i) shall not apply to any distribution which is attributable to as- sets which have not been invested in employer securi- ties at all times during the period referred to in clause (i).’’ Subsec. (t)(3)(A). Pub. L. 100–647, § 1011A(c)(3), sub- stituted ‘‘(C), and (D)’’ for ‘‘and (C)’’. Subsec. (u)(1)(A). Pub. L. 100–647, § 1011A(i)(1), inserted ‘‘(other than subchapter L)’’ after ‘‘subtitle’’. Subsec. (u)(3)(D). Pub. L. 100–647, § 1011A(i)(3), sub- stituted ‘‘is purchased’’ for ‘‘which is purchased’’ and ‘‘is held’’ for ‘‘which is held’’. Pub. L. 100–647, § 1011A(i)(2), substituted ‘‘until all amounts under such contract are distributed to the em- ployee for whom such contract was purchased or the employee’s beneficiary’’ for ‘‘until such time as the em- ployee separates from service’’. Subsec. (u)(3)(E). Pub. L. 100–647, § 1011A(i)(3), sub- stituted ‘‘is’’ for ‘‘which is’’. Subsec. (u)(4)(C). Pub. L. 100–647, § 1011A(i)(4), added subpar. (C). Subsecs. (v), (w). Pub. L. 100–647, § 5012(b)(1), added subsec. (v) and redesignated former subsec. (v) as (w). 1986—Subsec. (b). Pub. L. 99–514, § 1122(c)(2), amended subsec. (b) generally. Prior to amendment, subsec. (b) read as follows: ‘‘Gross income does not include that part of any amount received as an annuity under an an- nuity, endowment, or life insurance contract which bears the same ratio to such amount as the investment in the contract (as of the annuity starting date) bears to the expected return under the contract (as of such date). This subsection shall not apply to any amount to which subsection (d)(1) (relating to certain employee annuities) applies.’’ Subsec. (d). Pub. L. 99–514, § 1122(c)(1), struck out sub- sec. (d) which related to employee’s annuities where the employee’s contributions were recoverable in 3 years. Subsec. (e)(4)(C). Pub. L. 99–514, § 1826(b)(3), added sub- par. (C). Subsec. (e)(5)(D). Pub. L. 99–514, § 1122(c)(3)(B), sub- stituted ‘‘paragraphs (7) and (8)’’ for ‘‘paragraph (7)’’ in introductory provisions. Pub. L. 99–514, § 1854(b)(1), inserted closing provisions which read as follows: ‘‘Any dividend described in sec- tion 404(k) which is received by a participant or bene- ficiary shall, for purposes of this subparagraph, be treated as paid under a separate contract to which clause (ii)(I) applies.’’ Subsec. (e)(7)(B). Pub. L. 99–514, § 1852(c)(1), in intro- ductory provisions substituted ‘‘any plan or contract’’ for ‘‘any trust or contract’’, in cl. (ii) substituted ‘‘85 percent or more of’’ for ‘‘85 percent of’’, and inserted closing provision: ‘‘For purposes of clause (ii), deduct- ible employee contributions (as defined in subsection (o)(5)(A)) shall not be taken into account.’’ Subsec. (e)(8), (9). Pub. L. 99–514, § 1122(c)(3)(A), added pars. (8) and (9). Subsec. (f). Pub. L. 99–514, § 1852(c)(3), in introductory provisions, substituted ‘‘subsections (d)(1) and (e)(7)’’ for ‘‘subsection (d)(1)’’ and ‘‘subsection (e)(6)’’ for ‘‘sub- section (e)(1)(B)’’. Subsec. (m)(2)(B). Pub. L. 99–514, § 1852(c)(4)(A), in- serted ‘‘and subsection (e)(7) (relating to plans where substantially all contributions are employee contribu- tions)’’. Subsec. (m)(2)(C). Pub. L. 99–514, § 1852(c)(4)(B), sub- stituted ‘‘subsection (e)(6)’’ for ‘‘subsection (e)(1)(B)’’. Subsec. (m)(5). Pub. L. 99–514, § 1852(a)(2)(C), which di- rected that par. (5) be amended by substituting ‘‘5-per- cent owners’’ for ‘‘owner-employees’’ in heading, was executed by substituting ‘‘5-percent owners’’ for ‘‘key employees’’, to reflect the probable intent of Congress and intervening amendment by section 713(c)(1)(B) of Pub. L. 98–369. Subsec. (m)(5)(A). Pub. L. 99–514, § 1123(d)(1), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: ‘‘This subparagraph shall apply— ‘‘(i) to amounts which— ‘‘(I) are received from a qualified trust described in section 401(a) or under a plan described in section 403(a), and ‘‘(II) are received by a 5-percent owner before such owner attains the age of 591⁄2 years, for any reason other than such owner becoming disabled (within the meaning of paragraph (7) of this sec- tion), and ‘‘(ii) to amounts which are received from a qualified trust described in section 401(a) or under a plan de- scribed in section 403(a) at any time by a 5-percent owner, or by the successor of such owner, but only to the extent that such amounts are determined (under regulations prescribed by the Secretary) to exceed the benefits provided for such individual under the plan formula. Clause (i) shall not apply to any amount received by an individual in his capacity as a policyholder of an annu- ity, endowment, or life insurance contract which is in the nature of a dividend or similar distribution and clause (i) shall not apply to amounts attributable to benefits accrued before January 1, 1985.’’ Pub. L. 99–514, § 1852(a)(2)(A), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as fol- lows: ‘‘This paragraph shall apply— ‘‘(i) to amounts (other than any amount received by an individual in his capacity as a policyholder of an annuity, endowment, or life insurance contract which is in the nature of a dividend or similar distribution) which are received from a qualified trust described in section 401(a) or under a plan described in section 403(a) and which are received by an individual, who is, or has been, a 5-percent owner, before such individual attains the age of 591⁄2 years, for any reason other than the individual’s becoming disabled (within the meaning of paragraph (7) of this subsection), but only to the extent that such amounts are attributable to contributions paid on behalf of such individual (other than contributions made by him as a 5-percent owner) while he was a 5-percent owner, and ‘‘(ii) to amounts which are received from a qualified trust described in section 401(a) or under a plan de- scribed in section 403(a) at any time by an individual who is, or has been, a 5-percent owner or by the suc- Page 486 TITLE 26—INTERNAL REVENUE CODE § 72 cessor of such individual, but only to the extent that such amounts are determined, under regulations pre- scribed by the Secretary, to exceed the benefits pro- vided for such individual under the plan formula.’’ Subsec. (m)(5)(C). Pub. L. 99–514, § 1852(a)(2)(B), amended subpar. (C) generally. Prior to amendment, subpar. (C) read as follows: ‘‘For purposes of this para- graph, the term ‘5 percent owner’ have the same mean- ings as when used in section 416.’’ Subsec. (m)(10). Pub. L. 99–514, § 1898(c)(1)(B), inserted ‘‘who is the spouse or former spouse of the partici- pant’’. Subsec. (o)(5). Pub. L. 99–514, § 1101(b)(2)(C), inserted ‘‘and made for a taxable year beginning before January 1, 1987,’’ in subpar. (A), substituted ‘‘subsection (p)(3)(A)(i)’’ for ‘‘section 219(e)(3)’’ in subpar. (C), and substituted ‘‘subsection (p)(3)(B)’’ for ‘‘section 219(e)(4)’’ in subpar. (D). Subsec. (p)(2)(A)(i). Pub. L. 99–514, § 1134(a), amended cl. (i) generally. Prior to amendment, cl. (i) read as fol- lows: ‘‘$50,000, or’’. Subsec. (p)(2)(B)(ii). Pub. L. 99–514, § 1134(d), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: ‘‘Clause (i) shall not apply to any loan used to acquire, construct, reconstruct, or substantially reha- bilitate any dwelling unit which within a reasonable time is to be used (determined at the time the loan is made) as a principal residence of the participant or a member of the family (within the meaning of section 267(c)(4)) of the participant.’’ Subsec. (p)(2)(C), (D). Pub. L. 99–514, § 1134(b), added subpar. (C) and redesignated former subpar. (C) as (D). Subsec. (p)(3). Pub. L. 99–514, § 1134(c), added par. (3) and redesignated former par. (3) as (4). Pub. L. 99–514, § 1101(b)(2)(B), amended par. (3) gen- erally. Prior to amendment, par. (3) read as follows: ‘‘For purposes of this subsection, the term ‘qualified employer plan’ means any plan which was (or was de- termined to be) a qualified employer plan (as defined in section 219(e)(3) other than a plan described in sub- section (e)(7)). For purposes of this subsection, such term includes any government plan (as defined in sec- tion 219(e)(4)).’’ Subsec. (p)(4), (5). Pub. L. 99–514, § 1134(c), redesig- nated former pars. (3) and (4) as (4) and 5, respectively. Subsec. (q). Pub. L. 99–514, § 1123(b)(1)(B), substituted ‘‘10-percent’’ for ‘‘5-percent’’ in heading. Subsec. (q)(1). Pub. L. 99–514, § 1123(b)(1)(A), sub- stituted ‘‘10 percent’’ for ‘‘5 percent’’. Subsec. (q)(2). Pub. L. 99–514, § 1123(b)(3), substituted ‘‘Paragraph (1)’’ for ‘‘This subsection’’ in introductory provisions. Subsec. (q)(2)(B). Pub. L. 99–514, § 1826(c), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: ‘‘made to a beneficiary (or to the estate of an annuitant) on or after the death of an annu- itant,’’. Subsec. (q)(2)(D). Pub. L. 99–514, § 1123(b)(2), amended subpar. (D) generally. Prior to amendment, subpar. (D) read as follows: ‘‘which is one of a series of substan- tially equal periodic payments made for the life of a taxpayer or over a period extending for at least 60 months after the annuity starting date,’’. Subsec. (q)(2)(E). Pub. L. 99–514, § 1852(c)(2), inserted ‘‘(determined without regard to subsection (e)(7))’’. Subsec. (q)(2)(G). Pub. L. 99–514, § 1826(d), added sub- par. (G). Subsec. (q)(2)(I), (J). Pub. L. 99–514, § 1123(b)(4), which added subpars. (I) and (J) directed the amendment of subpar. (G) by striking out ‘‘or’’ at the end thereof, and of subpar. (H) by striking out the period at the end thereof, could not be executed to subpars. (G) and (H) because subpar. (G) does not contain ‘‘or’’, and no sub- par. (H) was enacted. Subsec. (q)(3). Pub. L. 99–514, § 1123(b)(3), added par. (3). Subsec. (s)(1). Pub. L. 99–514, § 1826(b)(2), substituted ‘‘any holder of such contract’’ for ‘‘the holder of such contract’’ in subpars. (A) and (B). Subsec. (s)(5). Pub. L. 99–514, § 1826(a), added par. (5). Subsec. (s)(6), (7). Pub. L. 99–514, § 1826(b)(1), added pars. (6) and (7). Subsec. (t). Pub. L. 99–514, § 1123(a), added subsec. (t) and redesignated former subsec. (t) as (u). Subsecs. (u), (v). Pub. L. 99–514, § 1135(a), added sub- sec. (u) and redesignated former subsec. (u) as (v). 1984—Subsec. (e)(5)(D). Pub. L. 98–369, § 523(b)(1), sub- stituted ‘‘Except as provided in paragraph (7), this’’ for ‘‘This’’. Subsec. (e)(5)(D)(ii)(IV). Pub. L. 98–369, § 211(b)(1), which directed substitution of ‘‘section 818(a)(3)’’ for ‘‘805(d)(3)’’ in subpar. (D)(i)(IV), was executed to subpar. (D)(ii)(IV) to reflect the probable intent of Congress. Subsec. (e)(7). Pub. L. 98–369, § 523(a), added par. (7). Subsec. (k). Pub. L. 98–369, § 421(b)(1), repealed subsec. (k) relating to payments in discharge of alimony. Subsec. (m)(5). Pub. L. 98–369, § 713(c)(1)(B), sub- stituted ‘‘key employees’’ for ‘‘owner-employees’’ in heading. Subsec. (m)(5)(A). Pub. L. 98–369, § 521(d)(1), (2), sub- stituted ‘‘5-percent owner’’ for ‘‘key employee’’ wher- ever appearing and struck out ‘‘in a top-heavy plan’’ at end of cl. (i). Pub. L. 98–369, § 713(c)(1)(A), substituted ‘‘as a key em- ployee’’ for ‘‘as an owner-employee’’ in cl. (i). Subsec. (m)(5)(C). Pub. L. 98–369, § 521(d)(3), sub- stituted ‘‘the term ‘5 percent owner’ ’’ for ‘‘the terms ‘key employee’ and ‘top-heavy plan’ ’’. Subsec. (m)(9). Pub. L. 98–369, § 713(d)(1), repealed par. (9) relating to return of excess contributions before due date of return. Subsec. (m)(10). Pub. L. 98–397 added par. (10). Subsec. (o)(1). Pub. L. 98–369, § 491(d)(3), substituted ‘‘402 and 403’’ for ‘‘402, 403, and 405’’. Subsec. (o)(3)(A). Pub. L. 98–369, § 713(b)(1)(A), inserted ‘‘(other than the exception contained in paragraph (2) thereof)’’. Subsec. (o)(4). Pub. L. 98–369, § 491(d)(4), substituted ‘‘and 408(d)(3)’’ for ‘‘408(d)(3), and 409(b)(3)(C)’’. Subsec. (p)(2)(A). Pub. L. 98–369, § 713(b)(1)(B), inserted at end ‘‘For purposes of clause (ii), the present value of the nonforfeitable accrued benefit shall be determined without regard to any accumulated deductible em- ployee contributions (as defined in subsection (o)(5)(B)).’’ Subsec. (p)(2)(A)(ii). Pub. L. 98–369, § 713(b)(4), sub- stituted as cl. (ii) ‘‘the greater of (I) one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan, or (II) $10,000’’ for ‘‘1⁄2 of the present value of the nonforfeitable accrued benefit of the employee under the plan (but not less than $10,000)’’. Subsec. (p)(3). Pub. L. 98–369, § 523(b)(2), inserted ‘‘other than a plan described in subsection (e)(7)’’. Subsec. (q)(1). Pub. L. 98–369, § 222(a), amended par. (1) generally, striking out designation ‘‘(A) In general.—’’ preceding text, substituting ‘‘which is includible in gross income’’ for ‘‘includible in gross income which is properly allocable to any investment in the annuity contract made during the 10-year period ending on the date such amount was received by the taxpayer’’, and striking out former subpar. (B), which had provided that for purposes of subpar. (A), the amount includible in gross income would be allocated to the earliest in- vestment in the contract with respect to which amounts had not been previously fully allocated under this par. Subsecs. (s), (t). Pub. L. 98–369, § 222(b), added subsec. (s) and redesignated former subsec. (s) as (t). 1983—Subsec. (o)(2)(A). Pub. L. 97–448, § 103(c)(6), struck out ‘‘to which the employee made one or more deductible employee contributions’’ after ‘‘from a qualified employer plan or government plan’’. Subsec. (p)(3). Pub. L. 97–448, § 103(c)(3)(B)(i), struck out ‘‘without regard to subparagraph (D) thereof’’ after ‘‘as defined in section 219(e)(3)’’. Subsecs. (r), (s). Pub. L. 98–76 added subsec. (r) and re- designated former subsec. (r) as (s). 1982—Subsec. (e). Pub. L. 97–248, § 265(a), in par. (1) substituted provisions relating to the application of Page 487 TITLE 26—INTERNAL REVENUE CODE § 72 this subsection to amounts received under annuity, en- dowment, or life insurance contracts which are not re- ceived as annuities and to amounts received as divi- dends for provisions which stated a general rule relat- ing to the includability as gross income of amounts that were received under annuity, endowment, or life insurance contracts which were not received as annu- ities and also stated that for the purposes of this sec- tion amounts which were received as dividends would be treated as amounts not received as an annuity, in par. (2) substituted provisions stating a general rule as to the includability as gross income of amounts re- ceived before or after the annuity starting date for pro- visions which set out those amounts which would be treated as amounts not received as an annuity, and added pars. (3) to (6). Subsec. (m)(4). Pub. L. 97–248, § 236(b)(1), struck out par. (4) which related to amounts constructively re- ceived with respect to assignments or pledges, and loans on contracts. Subsec. (m)(5). Pub. L. 97–248, § 237(d)(1), (2), in subpar. (A) substituted applicability to key employees for ap- plicability to owner-employees and added subpar. (C). Subsec. (m)(6). Pub. L. 97–248, § 237(d)(3), struck out ‘‘except in applying paragraph (5),’’ after ‘‘shall’’. Subsec. (m)(8). Pub. L. 97–248, § 236(b)(1), struck out par. (8) which related to loans to owner-employees. Subsec. (o)(3)(A). Pub. L. 97–248, § 236(b)(2), substituted reference to subsec. (p) of this section for references to subsec. (m)(4) and (8) of this section. Subsec. (p). Pub. L. 97–248, § 236(a), added subsec. (p). Former subsec. (p) redesignated (q). Subsec. (q). Pub. L. 97–248, § 265(b)(1), added subsec. (q). Former subsec. (q) redesignated (r). Pub. L. 97–248, § 236(a), redesignated former subsec. (p) as (q). Subsec. (r). Pub. L. 97–248, §§ 236(a), 265(b)(1), redesig- nated former subsec. (p) as (r). 1981—Subsec. (m)(6). Pub. L. 97–34, § 312(d)(1), ex- panded definition of ‘‘owner-employee’’ to include an employee within the meaning of section 401(c)(1) except in applying paragraph (5). Subsec. (m)(8). Pub. L. 97–34, § 312(d)(2), added par. (8). Subsec. (m)(9). Pub. L. 97–34, § 312(e)(1), added par. (9). Subsecs. (o), (p). Pub. L. 97–34, § 311(b)(1), added sub- sec. (o) and redesignated former subsec. (o) as (p). 1976—Subsec. (c)(2), (3)(A). Pub. L. 94–455, § 1906(b)(13)(A), struck out ‘‘or his delegate’’ after ‘‘Sec- retary’’. Subsec. (d)(1). Pub. L. 94–455, § 1901(a)(12), struck out in subpar. (B) ‘‘(whether or not before January 1, 1954)’’ after ‘‘beginning on the date’’, and in provisions fol- lowing subpar. (B) struck out ‘‘(under this paragraph and prior income tax laws)’’ after ‘‘until there has been so excluded’’. Subsec. (f). Pub. L. 94–455, § 1906(b)(13)(A), struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Subsec. (i). Pub. L. 94–455, § 1951(b)(1)(A), struck out subsec. (i) which related to joint annuities where first annuitant died in 1951, 1952, or 1953. Subsec. (m)(2), (3). Pub. L. 94–455, § 1906(b)(13)(A), struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Subsec. (m)(4)(A). Pub. L. 94–455, § 1901(a)(13), sub- stituted ‘‘an individual retirement account’’ for ‘‘an in- dividual retirement amount’’. Subsec. (m)(5)(A)(ii), (7). Pub. L. 94–455, § 1906(b)(13)(A), struck out ‘‘or his delegate’’ after ‘‘Sec- retary’’. 1974—Subsec. (m)(1). Pub. L. 93–406, § 2001(h)(2), struck out par. (1) which related to certain amounts received before annuity starting date. Subsec. (m)(4)(A). Pub. L. 93–406, § 2002(g)(10)(A), in- serted references to an individual retirement amount described in section 408(a) and an individual retirement annuity described in section 408(b). Subsec. (m)(5)(A). Pub. L. 93–406, § 2001(e)(5), (h)(3), substituted ‘‘(other than contributions made by him as an owner-employee)’’ for ‘‘(whether or not paid by him)’’ in cl. (i), and struck out cl. (iii) which had made reference to amounts which were received, by an indi- vidual who was or had been, an owner-employee, by reason of the distribution under the provisions of sec- tion 401(e)(2)(E) of his entire interest in all qualified trusts described in section 401(a) and in all plans de- scribed in section 403(a). Subsec. (m)(5)(B). Pub. L. 93–406, § 2001(g)(1), sub- stituted provisions that if a person receives an amount to which subsec. (m)(5) applies, his tax under this chap- ter for the taxable year in which such amount is re- ceived shall be increased by an amount equal to 10 per- cent of the portion of the amount so received which is includible in his gross income for such taxable year for provisions that if the aggregate amounts to which sub- sec. (m)(5) applied received by any person in his taxable year equalled or exceeded $2,500, the increase in his tax for the taxable year in which such amounts were re- ceived and attributable to such amounts could not be less than 110 percent of the aggregate increase in taxes, for the taxable year and the 4 immediately preceding taxable years, which would have resulted if such amounts had been included in such person’s gross in- come ratably over such taxable years, with provision for alternate computation if deductions had been al- lowed under section 404 for contributions paid for a number of prior taxable years less than 4. Subsec. (m)(5)(C) to (E). Pub. L. 93–406, § 2001(g)(2)(A), struck out subpars. (C) to (E) which contained special rules for the application of subsec. (m)(5). Subsec. (m)(6). Pub. L. 93–406, § 2002(g)(10)(B), inserted reference to an individual for whose benefit an indi- vidual retirement account or annuity described in sec- tion 408(a) or (b) is maintained. Subsec. (n). Pub. L. 93–406, §§ 2005(c)(3), 2007(b)(2), re- designated former subsec. (o) as (n) and in heading of subsec. (n) as so redesignated inserted reference to sur- vivor benefit plan. Former subsec. (n), which set out provisions covering the treatment to be accorded total distributions, was struck out. Subsec. (o). Pub. L. 93–406, § 2005(c)(3), redesignated former subsec. (p) as (o). Former subsec. (o) redesig- nated (n) and amended. Subsec. (p). Pub. L. 93–406, § 2005(c)(3), redesignated subsec. (p) as (o). 1969—Subsec. (n)(1). Pub. L. 91–172, § 515(b)(1), altered section to accommodate the insertion into sections 402 and 403 of provisions under which employer contribu- tions to qualified pension, profit sharing, stock bonus, and annuity plans for plan years beginning after 1969 are to be treated as ordinary income when received in a lump sum distribution, but with such amounts to be eligible for a special averaging procedure. Subsec. (n)(4). Pub. L. 91–172, § 515(b)(2), added par. (4). 1966—Subsecs. (o), (p). Pub. L. 89–365 added subsec. (o) and redesignated former subsec. (o) as (p). 1965—Subsec. (m)(5)(A)(i). Pub. L. 89–97, § 106(d)(2)(A), substituted ‘‘paragraph (7) of this subsection’’ for ‘‘sec- tion 213(g)(3)’’. Subsec. (m)(7). Pub. L. 89–97, § 106(d)(2)(B), added par. (7). Subsec. (n)(1). Pub. L. 89–97, § 106(d)(2)(C), substituted in subpars. (A)(iii) and (B)(iii) ‘‘subsection (m)(7)’’ for ‘‘section 213(g)(3)’’. Subsec. (n)(3). Pub. L. 89–44 substituted ‘‘sections 31 and 39’’ for ‘‘section 31’’ in sentence following subpar. (B). 1964—Subsec. (e)(3). Pub. L. 88–272 struck out par. (3) which provided for a limit on the tax attributable to the receipt of a lump sum. 1962—Subsec. (d)(2). Pub. L. 87–792, § 4(a), designated existing provisions as cl. (A) and added cl. (B). Subsec. (f). Pub. L. 87–834 inserted sentence providing that par. (2) shall not apply to amounts which were contributed by the employer after Dec. 31, 1962, and which would not have been includible in the gross in- come of the employee by reason of the application of Section 911 if such amounts had been paid directly to the employee at the time of contribution, and making such sentence inapplicable to amounts which were con- tributed by the employer, as determined under regula- tions, to provide pension or annuity credits, to the ex- Page 488 TITLE 26—INTERNAL REVENUE CODE § 72 tent such credits are attributable to services performed before Jan. 1, 1963, and are provided pursuant to pen- sion or annuity plan provisions in existence on Mar. 12, 1962, and on that date applicable to such services. Subsecs. (m) to (o). Pub. L. 87–792, § 4(b), added sub- secs. (m) and (n) and redesignated former subsec. (m) as (o). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2022 AMENDMENT Pub. L. 117–328, div. T, title I, § 115(c), Dec. 29, 2022, 136 Stat. 5297, provided that: ‘‘The amendments made by this section [amending this section] shall apply to dis- tributions made after December 31, 2023.’’ Pub. L. 117–328, div. T, title I, § 127(g), Dec. 29, 2022, 136 Stat. 5330, provided that: ‘‘The amendments made by this section [enacting sections 1193 to 1193c of Title 29, Labor, and amending this section, section 402A of this title, and sections 1002, 1021, 1030, and 1104 of Title 29] shall apply to plan years beginning after December 31, 2023.’’ Pub. L. 117–328, div. T, title III, § 308(c), Dec. 29, 2022, 136 Stat. 5345, provided that: ‘‘The amendments made by this section [amending this section] shall apply to distributions made after the date of the enactment of this Act [Dec. 29, 2022].’’ Pub. L. 117–328, div. T, title III, § 311(b), Dec. 29, 2022, 136 Stat. 5347, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendment made by this section [amending this section] shall apply to distributions made after the date of the enactment of this Act [Dec. 29, 2022]. ‘‘(2) TEMPORARY RULE WITH RESPECT TO DISTRIBUTIONS ALREADY MADE.—In the case of a qualified birth or adoption distribution (as defined in section 72(t)(2)(H)(iii)(I) of the Internal Revenue Code of 1986) made on or before the date of the enactment of this Act, section 72(t)(2)(H)(v)(I) of such Code (as amended by this Act [div. T of Pub. L. 117–328]) shall apply to such distribution by substituting ‘after such distribu- tion and before January 1, 2026’ for ‘during the 3-year period beginning on the day after the date on which such distribution was received’.’’ Pub. L. 117–328, div. T, title III, § 314(b), Dec. 29, 2022, 136 Stat. 5350, provided that: ‘‘The amendments made by this section [amending this section] shall apply to distributions made after December 31, 2023.’’ Pub. L. 117–328, div. T, title III, § 323(e), Dec. 29, 2022, 136 Stat. 5358, provided that: ‘‘(1) IN GENERAL.—The amendments made by sub- sections (a), (b), and (c) [amending this section and sec- tion 6724 of this title] shall apply to transfers, roll- overs, and exchanges occurring after December 31, 2023. ‘‘(2) ANNUITY PAYMENTS.—The amendment made by subsection (d) [amending this section] shall apply to distributions commencing on or after the date of the enactment of this Act [Dec. 29, 2022]. ‘‘(3) NO INFERENCE.—Nothing in the amendments made by this section shall be construed to create an in- ference with respect to the law in effect prior to the ef- fective date of such amendments.’’ Pub. L. 117–328, div. T, title III, § 326(b), Dec. 29, 2022, 136 Stat. 5359, provided that: ‘‘The amendment made by this section [amending this section] shall apply to dis- tributions made after the date of the enactment of this Act [Dec. 29, 2022].’’ Pub. L. 117–328, div. T, title III, § 329(b), Dec. 29, 2022, 136 Stat. 5361, provided that: ‘‘The amendment made by this section [amending this section] shall apply to dis- tributions made after the date of the enactment of this Act [Dec. 29, 2022].’’ Pub. L. 117–328, div. T, title III, § 330(b), Dec. 29, 2022, 136 Stat. 5361, provided that: ‘‘The amendment made by this section [amending this section] shall apply to dis- tributions made after the date of the enactment of this Act [Dec. 29, 2022].’’ Pub. L. 117–328, div. T, title III, § 331(a)(3), Dec. 29, 2022, 136 Stat. 5363, provided that: ‘‘The amendments made by this subsection [amending this section] shall apply to distributions with respect to disasters the in- cident period (as defined in section 72(t)(11)(F)(ii) of the Internal Revenue Code of 1986, as added by this sub- section) for which begins on or after the date which is 30 days after the date of the enactment of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 [Dec. 27, 2020].’’ Pub. L. 117–328, div. T, title III, § 331(b)(3), Dec. 29, 2022, 136 Stat. 5365, provided that: ‘‘The amendments made by this subsection [amending this section and section 402 of this title] shall apply to recontributions of withdrawals for home purchases with respect to dis- asters the incident period (as defined in section 72(t)(11)(F)(ii) of the Internal Revenue Code of 1986, as added by this subsection [probably should be ‘‘sub- section (a)’’]) for which begins on or after the date which is 30 days after the date of the enactment of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 [Dec. 27, 2020].’’ Pub. L. 117–328, div. T, title III, § 331(c)(2), Dec. 29, 2022, 136 Stat. 5366, provided that: ‘‘The amendment made by paragraph (1) [amending this section] shall apply to plan loans made with respect to disasters the incident period (as defined in section 72(t)(11)(F)(ii) of the Internal Revenue Code of 1986, as added by this sub- section [probably should be ‘‘subsection (a)’’]) for which begins on or after the date which is 30 days after the date of the enactment of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 [Dec. 27, 2020].’’ Pub. L. 117–328, div. T, title III, § 332(c), Dec. 29, 2022, 136 Stat. 5368, provided that: ‘‘The amendments made by this section [amending this section and section 408 of this title] shall apply to plan years beginning after December 31, 2023.’’ Pub. L. 117–328, div. T, title III, § 333(b), Dec. 29, 2022, 136 Stat. 5368, provided that: ‘‘The amendments made by this section [amending this section] shall apply to any determination of, or affecting, liability for taxes, interest, or penalties which is made on or after the date of the enactment of this Act [Dec. 29, 2022], without re- gard to whether the act (or failure to act) upon which the determination is based occurred before such date of enactment. Notwithstanding the preceding sentence, nothing in the amendments made by this section shall be construed to create an inference with respect to the law in effect prior to the effective date of such amend- ments.’’ Pub. L. 117–328, div. T, title III, § 334(e), Dec. 29, 2022, 136 Stat. 5372, provided that: ‘‘The amendments made by this section [enacting section 6050Z of this title and amending this section and sections 401, 403, 457, and 6724 of this title] shall apply to distributions made after the date which is 3 years after the date of the enactment of this Act [Dec. 29, 2022].’’ Pub. L. 117–328, div. T, title IV, § 401(c), Dec. 29, 2022, 136 Stat. 5388, provided that: ‘‘The amendments made by this section [amending this section and sections 401, 408, 408A, and 4973 of this title] shall take effect as if in- cluded in the section of the Setting Every Community Up for Retirement Enhancement Act of 2019 [div. O of Pub. L. 116–94] to which the amendment relates.’’ EFFECTIVE DATE OF 2019 AMENDMENT Pub. L. 116–94, div. O, title I, § 108(b), Dec. 20, 2019, 133 Stat. 3149, provided that: ‘‘The amendments made by subsection (a) [amending this section] shall apply to loans made after the date of the enactment of this Act [Dec. 20, 2019].’’ Pub. L. 116–94, div. O, title I, § 113(b), Dec. 20, 2019, 133 Stat. 3156, provided that: ‘‘The amendments made by this section [amending this section] shall apply to dis- tributions made after December 31, 2019.’’ EFFECTIVE DATE OF 2015 AMENDMENT Pub. L. 114–113, div. Q, title III, § 308(b), Dec. 18, 2015, 129 Stat. 3089, provided that: ‘‘The amendments made by this section [amending this section] shall apply to distributions after December 31, 2015.’’ Page 489 TITLE 26—INTERNAL REVENUE CODE § 72 Pub. L. 114–26, § 2(d), June 29, 2015, 129 Stat. 319, pro- vided that: ‘‘The amendments made by this section [amending this section] shall apply to distributions after December 31, 2015.’’ EFFECTIVE DATE OF 2014 AMENDMENT Amendment by Pub. L. 113–295 effective 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 2010 AMENDMENT Pub. L. 111–240, title II, § 2113(b), Sept. 27, 2010, 124 Stat. 2567, provided that: ‘‘The amendment made by this section [amending this section] shall apply to amounts received in taxable years beginning after De- cember 31, 2010.’’ EFFECTIVE DATE OF 2008 AMENDMENT Pub. L. 110–458, title I, § 112, Dec. 23, 2008, 122 Stat. 5113, provided that: ‘‘Except as otherwise provided in this subtitle [subtitle A (§§ 101–112) of title I of Pub. L. 110–458, see Tables for classification], the amendments made by this subtitle shall take effect as if included in the provisions of the 2006 Act [Pub. L. 109–280] to which the amendments relate.’’ Pub. L. 110–245, title I, § 107(b), June 17, 2008, 122 Stat. 1631, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to individuals ordered or called to active duty on or after December 31, 2007.’’ EFFECTIVE DATE OF 2006 AMENDMENT Pub. L. 109–280, title VIII, § 827(c), Aug. 17, 2006, 120 Stat. 1001, provided that: ‘‘(1) EFFECTIVE DATE.—The amendment made by this section [amending this section and sections 401 and 403 of this title] shall apply to distributions after Sep- tember 11, 2001. ‘‘(2) WAIVER OF LIMITATIONS.—If refund or credit of any overpayment of tax resulting from the amend- ments made by this section is prevented at any time before the close of the 1-year period beginning on the date of the enactment of this Act [Aug. 17, 2006] by the operation of any law or rule of law (including res judi- cata), such refund or credit may nevertheless be made or allowed if claim therefor is filed before the close of such period.’’ Pub. L. 109–280, title VIII, § 828(b), Aug. 17, 2006, 120 Stat. 1001, provided that: ‘‘The amendment made by this section [amending this section] shall apply to dis- tributions after the date of the enactment of this Act [Aug. 17, 2006].’’ Pub. L. 109–280, title VIII, § 844(g), Aug. 17, 2006, 120 Stat. 1013, provided that: ‘‘(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section [enacting section 6050U of this title and amending this section and sections 848, 1035, 6724, and 7702B of this title] shall apply to contracts issued after December 31, 1996, but only with respect to taxable years beginning after December 31, 2009. ‘‘(2) TAX-FREE EXCHANGES.—The amendments made by subsection (b) [amending section 1035 of this title] shall apply with respect to exchanges occurring after Decem- ber 31, 2009. ‘‘(3) INFORMATION REPORTING.—The amendments made by subsection (d) [enacting section 6050U of this title and amending section 6724 of this title] shall apply to charges made after December 31, 2009. ‘‘(4) POLICY ACQUISITION EXPENSES.—The amendment made by subsection (e) [amending section 848 of this title] shall apply to specified policy acquisition ex- penses determined for taxable years beginning after De- cember 31, 2009. ‘‘(5) TECHNICAL AMENDMENT.—The amendment made by subsection (f) [amending section 7702B of this title] shall take effect as if included in section 321(a) of the Health Insurance Portability and Accountability Act of 1996 [Pub. L. 104–191].’’ EFFECTIVE DATE OF 2004 AMENDMENT Pub. L. 108–357, title VIII, § 906(c), Oct. 22, 2004, 118 Stat. 1654, provided that: ‘‘The amendments made by this section [amending this section and section 83 of this title] shall apply to distributions on or after the date of the enactment of this Act [Oct. 22, 2004].’’ Amendment by section 207(6), (7) of Pub. L. 108–311 ap- plicable to taxable years beginning after Dec. 31, 2004, see section 208 of Pub. L. 108–311, set out as a note under section 2 of this title. EFFECTIVE DATE OF 2001 AMENDMENT Amendment by Pub. L. 107–90 applicable to calendar years beginning after Dec. 31, 2001, see section 204(f) of Pub. L. 107–90, set out as a note under section 24 of this title. Amendment by Pub. L. 107–22 effective July 26, 2001, see section 1(c) of Pub. L. 107–22, set out as a note under section 26 of this title. Pub. L. 107–16, title IV, § 402(h), June 7, 2001, 115 Stat. 63, provided that: ‘‘The amendments made by this sec- tion [amending this section and sections 135, 221, 529, 530, 4973, and 6693 of this title] shall apply to taxable years beginning after December 31, 2001.’’ Pub. L. 107–16, title VI, § 632(a)(4), June 7, 2001, 115 Stat. 115, provided that: ‘‘The amendments made by this subsection [amending this section and sections 402, 403, 404, 415, and 664 of this title] shall apply to years beginning after December 31, 2001.’’ Amendment by section 641(a)(2)(C), (e)(1) of Pub. L. 107–16 applicable to distributions after Dec. 31, 2001, see section 641(f)(1) of Pub. L. 107–16, set out as a note under section 402 of this title. EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105–206, title III, § 3436(b), July 22, 1998, 112 Stat. 761, provided that: ‘‘The amendments made by this section [amending this section] shall apply to dis- tributions after December 31, 1999.’’ Amendment by section 6023(3), (4) of Pub. L. 105–206 effective July 22, 1998, see section 6023(32) of Pub. L. 105–206, set out as a note under section 34 of this title. Amendment by sections 6004(d)(3)(B) and 6005(c)(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 Pub. L. 105–34, title II, § 203(c), Aug. 5, 1997, 111 Stat. 809, provided that: ‘‘The amendments made by this sec- tion [amending this section] shall apply to distribu- tions after December 31, 1997, with respect to expenses paid after such date (in taxable years ending after such date), for education furnished in academic periods be- ginning after such date.’’ Pub. L. 105–34, title III, § 303(c), Aug. 5, 1997, 111 Stat. 831, provided that: ‘‘The amendments made by this sec- tion [amending this section] shall apply to payments and distributions in taxable years beginning after De- cember 31, 1997.’’ Pub. L. 105–34, title X, § 1075(c), Aug. 5, 1997, 111 Stat. 949, provided that: ‘‘The amendments made by this sec- tion [amending this section] shall apply with respect to annuity starting dates beginning after December 31, 1997.’’ EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104–191, title III, § 361(d), Aug. 21, 1996, 110 Stat. 2072, provided that: ‘‘The amendments made by this section [amending this section] shall apply to dis- tributions after December 31, 1996.’’ Pub. L. 104–188, title I, § 1403(b), Aug. 20, 1996, 110 Stat. 1791, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply in cases where the annuity starting date is after the 90th day after the date of the enactment of this Act [Aug. 20, 1996].’’ Page 490 TITLE 26—INTERNAL REVENUE CODE § 72 Pub. L. 104–188, title I, § 1421(e), Aug. 20, 1996, 110 Stat. 1800, provided that: ‘‘The amendments made by this section [amending this section, sections 219, 280G, 402, 404, 408, 414, 416, 457, 3121, 3306, 3401, 4972, and 6693 of this title, sections 1021 and 1104 of Title 29, Labor, and sec- tion 409 of Title 42, The Public Health and Welfare] shall apply to taxable years beginning after December 31, 1996.’’ Pub. L. 104–188, title I, § 1463(b), Aug. 20, 1996, 110 Stat. 1824, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to taxable years beginning after December 31, 1996.’’ Pub. L. 104–188, title I, § 1704(l)(2), Aug. 20, 1996, 110 Stat. 1882, provided that: ‘‘The amendment made by paragraph (1) [amending this section] shall take effect as if included in the amendments made by section 1122(c) of the Tax Reform Act of 1986 [Pub. L. 99–514].’’ 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 Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1988 AMENDMENT Amendment by sections 1011A(b)(1)(A), (B), (2), (9), (c)(1)–(8), (h), (i), and 1018(k), (t)(1)(A), (B), and (u)(8) 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 re- lates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. Amendment by section 5012(a), (b)(1), (d) of Pub. L. 100–647 applicable to contracts entered into on or after June 21, 1988, with special rule where death benefit in- creases by more than $150,000, certain other material changes taken into account, certain exchanges per- mitted, and special rule in the case of annuity con- tracts, see section 5012(e) of Pub. L. 100–647, set out as an Effective Date note under section 7702A of this title. EFFECTIVE DATE OF 1986 AMENDMENT Pub. L. 99–514, title XI, § 1101(c), Oct. 22, 1986, 100 Stat. 2414, provided that: ‘‘The amendments made by this section [amending this section and section 219 of this title] shall apply to contributions for taxable years be- ginning after December 31, 1986.’’ Amendment by section 1122(c)(1) of Pub. L. 99–514 ap- plicable to individuals whose annuity starting date is after July 1, 1986, amendment by section 1122(c)(2) of Pub. L. 99–514 applicable to individuals whose annuity starting date is after Dec. 31, 1986, and amendment by section 1122(c)(3) of Pub. L. 99–514 applicable to amounts received after July 1, 1986, in the case of any plan not described in section 72(e)(8)(D) of this title, see section 1122(h)(2) of Pub. L. 99–514, set out as a note under section 402 of this title. Pub. L. 99–514, title XI, § 1123(e), Oct. 22, 1986, 100 Stat. 2475, as amended by Pub. L. 100–647, title I, § 1011A(c)(11), (12), Nov. 10, 1988, 102 Stat. 3476, provided that: ‘‘(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section [amending this section and sections 403 and 408 of this title] shall apply to taxable years beginning after De- cember 31, 1986. ‘‘(2) SUBSECTION (c).—The amendments made by sub- section (c) [amending section 403 of this title] shall apply to years beginning after December 31, 1988, but only with respect to distributions from contracts de- scribed in section 403(b) of the Internal Revenue Code of 1986 which are attributable to assets other than assets held as of the close of the last year beginning before January 1, 1989. ‘‘(3) EXCEPTION WHERE DISTRIBUTION COMMENCES.—The amendments made by this section shall not apply to distributions to any employee from a plan maintained by any employer if— ‘‘(A) as of March 1, 1986, the employee separated from service with the employer, ‘‘(B) as of March 1, 1986, the accrued benefit of the employee was in pay status pursuant to a written election providing a specific schedule for the distribu- tion of the entire accrued benefit of the employee, and ‘‘(C) such distribution is made pursuant to such written election. ‘‘(4) TRANSITION RULE.—The amendments made by this section shall not apply with respect to any benefits with respect to which a designation is in effect under section 242(b)(2) of the Tax Equity and Fiscal Responsi- bility Act of 1982 [section 242(b)(2) of Pub. L. 97–248, for- merly set out as an Effective Date of 1982 Amendment note under section 401 of this title]. ‘‘(5) SPECIAL RULE FOR DISTRIBUTIONS UNDER AN ANNU- ITY CONTRACT.—The amendments made by paragraphs (1), (2), and (3) of subsection (b) [amending this section] shall not apply to any distribution under an annuity contract if— ‘‘(A) as of March 1, 1986, payments were being made under such contract pursuant to a written election providing a specific schedule for the distribution of the taxpayer’s interest in such contract, and ‘‘(B) such distribution is made pursuant to such written election.’’ Pub. L. 99–514, title XI, § 1134(e), Oct. 22, 1986, 100 Stat. 2484, provided that: ‘‘The amendments made by this section [amending this section] shall apply to loans made, renewed, renegotiated, modified, or extended after December 31, 1986.’’ Pub. L. 99–514, title XI, § 1135(b), Oct. 22, 1986, 100 Stat. 2485, provided that: ‘‘The amendment made by sub- section (a) [amending this section] shall apply to con- tributions to annuity contracts after February 28, 1986.’’ Amendment by sections 1826(a), (d), 1852(a)(2), (c)(1)–(4), and 1854(b)(1) of Pub. L. 99–514 effective, ex- cept as otherwise provided, as if included in the provi- sions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title. Pub. L. 99–514, title XVIII, § 1826(b)(4), Oct. 22, 1986, 100 Stat. 2850, provided that: ‘‘The amendments made by this subsection [amending this section] shall apply to contracts issued after the date which is 6 months after the date of the enactment of this Act [Oct. 22, 1986] in taxable years ending after such date.’’ Pub. L. 99–514, title XVIII, § 1826(c), Oct. 22, 1986, 100 Stat. 2850, as amended by Pub. L. 100–647, title I, § 1018(t)(1)(D), Nov. 10, 1988, 102 Stat. 3587, provided that the amendment made by section 1826(c) of Pub. L. 99–514 is effective with respect to distributions com- mencing after the date 6 months after Oct. 22, 1986. Pub. L. 99–514, title XVIII, § 1854(b)(6), Oct. 22, 1986, 100 Stat. 2878, provided that: ‘‘The amendments made by paragraphs (1) and (2) [amending this section and sec- tion 404 of this title] shall not apply to dividends paid before January 1, 1986, if the taxpayer treated such dividends in a manner inconsistent with such amend- ments on a return filed with the Secretary before the date of the enactment of this Act [Oct. 22, 1986].’’ Pub. L. 99–514, title XVIII, § 1898(c)(1)(C), Oct. 22, 1986, 100 Stat. 2951, provided that: ‘‘The amendments made by this paragraph [amending this section and section 402 of this title] shall apply to payments made after the date of the enactment of this Act [Oct. 22, 1986].’’ EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–397 effective Jan. 1, 1985, except as otherwise provided, see section 303(d) of Pub. L. 98–397, set out as a note under section 1001 of Title 29, Labor. Page 491 TITLE 26—INTERNAL REVENUE CODE § 72 Amendment by section 211(b)(1) of Pub. L. 98–369 ap- plicable to taxable years beginning after Dec. 31, 1983, see section 215 of Pub. L. 98–369, set out as an Effective Date note under section 801 of this title. Pub. L. 98–369, div. A, title II, § 222(c), July 18, 1984, 98 Stat. 774, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section] shall apply to contracts issued after the day which is 6 months after the date of the enactment of this Act [July 18, 1984] in taxable years ending after such date. ‘‘(2) TRANSITIONAL RULES FOR CONTRACTS ISSUED BE- FORE EFFECTIVE DATE.—In the case of any contract (other than a single premium contract) which is issued on or before the day which is 6 months after the date of the enactment of this Act, for purposes of section 72(q)(1)(A) of the Internal Revenue Code of 1986 [for- merly I.R.C. 1954] (as in effect on the day before the date of the enactment of this Act), any investment in such contract which is made during any calendar year shall be treated as having been made on January 1 of such calendar year.’’ Amendment by section 421(b)(1) of Pub. L. 98–369 ap- plicable to transfers after July 18, 1984, in taxable years ending after such date, subject to election to have re- peal apply to transfers after 1983 or to transfers pursu- ant to existing decrees, see section 421(d) of Pub. L. 98–369, set out as an Effective Date note under section 1041 of this title. Amendment by section 491(d)(3), (4) 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(d) 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. Pub. L. 98–369, div. A, title V, § 523(c), July 18, 1984, 98 Stat. 872, provided that: ‘‘The amendments made by this section [amending this section] shall apply to any amount received or loan made after the 90th day after the date of enactment of this Act [July 18, 1984].’’ Amendment by section 713(b)(1), (4), (c)(1)(A), (B) 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 sec- tion 31 of this title. Pub. L. 98–369, div. A, title VII, § 713(d)(1), July 18, 1984, 98 Stat. 957, as amended by Pub. L. 99–514, title XVIII, § 1875(c)(5), Oct. 22, 1986, 100 Stat. 2895, provided that the amendment made by section 713(d)(1) of Pub. L. 98–369 is effective with respect to contributions made in taxable years beginning after Dec. 31, 1983. EFFECTIVE DATE OF 1983 AMENDMENT Pub. L. 98–76, title II, § 227(b), Aug. 12, 1983, 97 Stat. 426, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by section 224 [enacting section 6050G of this title, amending this section and section 86 of this title, and enacting provisions set out as a note under section 231n of Title 45, Railroads] shall apply to benefits received after December 31, 1983, in taxable years ending after such date. ‘‘(2) TREATMENT OF CERTAIN LUMP-SUM PAYMENTS RE- CEIVED AFTER DECEMBER 31, 1983.—The amendments made by section 224 shall not apply to any portion of a lump- sum payment received after December 31, 1983, if the generally applicable payment date for such portion was before January 1, 1984. ‘‘(3) NO FRESH START.—For purposes of determining whether any benefit received after December 31, 1983, is includible in gross income by reason of section 72(r) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], as added by this Act, the amendments made by section 224 be treated as having been in effect during all peri- ods before 1984.’’ Pub. L. 97–448, title I, § 103(c)(3)(B)(ii), Jan. 12, 1983, 96 Stat. 2376, provided that: ‘‘The amendment made by clause (i) [amending this section] shall take effect as if the matter struck out had never been included in such paragraph.’’ Amendment by title I of Pub. L. 97–448 effective, ex- cept as otherwise provided, as if it had been included in the provision 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 Pub. L. 97–248, title II, § 236(c), Sept. 3, 1982, 96 Stat. 510, as amended by Pub. L. 97–448, title III, § 306(a)(11), Jan. 12, 1983, 96 Stat. 2404; Pub. L. 98–369, div. A, title V, § 554, title VII, § 713(b)(2), July 18, 1984, 98 Stat. 897, 957; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, pro- vided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section] shall apply to loans, as- signments, and pledges made after August 13, 1982. For purposes of the preceding sentence, the outstanding balance of any loan which is renegotiated, extended, re- newed, or revised after such date shall be treated as an amount received as a loan on the date of such renegoti- ation, extension, renewal, or revision. ‘‘(2) EXCEPTION FOR CERTAIN LOANS USED TO REPAY OUTSTANDING OBLIGATIONS.— ‘‘(A) IN GENERAL.—Any qualified refunding loan shall not be treated as a distribution by reason of the amendments made by this section to the extent such loan is repaid before August 14, 1983. ‘‘(B) QUALIFIED REFUNDING LOAN.—For purposes of subparagraph (A), the term ‘qualified refunding loan’ means any loan made after August 13, 1982, and before August 14, 1983, to the extent such loan is used to make a required principal payment. ‘‘(C) REQUIRED PRINCIPAL PAYMENT.—For purposes of subparagraph (B), the term ‘required principal pay- ment’ means any principal repayment on a loan made under the plan which was outstanding on August 13, 1982, if such repayment is required to be made after August 13, 1982, and before August 14, 1983 or if such loan was payable on demand. ‘‘(D) SPECIAL RULE FOR NON-KEY EMPLOYEES.—In the case of a non-key employee (within the meaning of section 416(i)(2) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]), this paragraph shall be applied by substituting ‘January 1, 1985’ for ‘August 14, 1983’ each place it appears. ‘‘(3) TREATMENT OF CERTAIN RENEGOTIATIONS.—If— ‘‘(A) the taxpayer after August 13, 1982, and before September 4, 1982, borrows money from a government plan (as defined in section 219(e)(4) of the Internal Revenue Code of 1986), ‘‘(B) under the applicable State law, such loan re- quires the renegotiation of all outstanding prior loans made to the taxpayer under such plan, and ‘‘(C) the renegotiation described in subparagraph (B) does not change the interest rate on, or extend the duration of, any such outstanding prior loan, then the renegotiation described in subparagraph (B) shall not be treated as a renegotiation, extension, re- newal, or revision for purposes of paragraph (1). If the renegotiation described in subparagraph (B) does not meet the requirements of subparagraph (C) solely be- cause it extends the duration of any such outstanding prior loan, the requirements of subparagraph (C) shall be treated as met with respect to such renegotiation if, before April 1, 1983, such extension is eliminated.’’ Pub. L. 97–248, title II, § 265(c), Sept. 3, 1982, 96 Stat. 547, provided that: ‘‘(1) SUBSECTION (a).—The amendments made by sub- section (a) [amending this section] shall take effect on August 13, 1982. ‘‘(2) SUBSECTION (b).—The amendments made by sub- section (b) [amending this section and sections 46, 50A, 53, 901, 1302, and 1304 of this title] shall apply to dis- tributions after December 31, 1982.’’ Page 492 TITLE 26—INTERNAL REVENUE CODE § 72 Amendment by section 237(d) of Pub. L. 97–248 appli- cable 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. EFFECTIVE DATE OF 1981 AMENDMENT Pub. L. 97–34, title III, § 312(f), Aug. 13, 1981, 95 Stat. 285, as amended by Pub. L. 97–448, title I, § 103(d)(3), 96 Stat. 2378, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 219, 401, 404, 408, 1379, and 4972 of this title] shall apply to taxable years beginning after December 31, 1981. ‘‘(2) TRANSITIONAL RULE.—The amendments made by subsection (d) [amending this section] shall not apply to any loan from a plan to a self-employed individual who is an employee within the meaning of section 401(c)(1) which is outstanding on December 31, 1981. For purposes of the preceding sentence, any loan which is renegotiated, extended, renewed, or revised after such date shall be treated as a new loan.’’ EFFECTIVE DATE OF 1976 AMENDMENT Amendment by section 1901(a)(12), (13) of Pub. L. 94–455 applicable with respect to taxable years begin- ning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title. Pub. L. 94–455, title XIX, § 1951(d), Oct. 4, 1976, 90 Stat. 1841, provided that: ‘‘Except as otherwise expressly pro- vided, the amendments made by this section [see Ta- bles for classification of section 1951 of Pub. L. 94–455] shall apply with respect to taxable years beginning after December 31, 1976.’’ EFFECTIVE DATE OF 1974 AMENDMENT Amendment by section 2001(e)(5) of Pub. L. 93–406 ap- plicable to contributions made in taxable years begin- ning after Dec. 31, 1975, see section 2001(i)(4) of Pub. L. 93–406, set out as a note under section 401 of this title. Pub. L. 93–406, title II, § 2001(i)(5), (6), Sept. 2, 1974, 88 Stat. 958, provided that: ‘‘(5) The amendments made by subsection (g) [amending this section and sections 46, 50A, 56, 404, and 901 of this title] apply to distributions made in taxable years beginning after December 31, 1975. ‘‘(6) The amendments made by subsection (h) [amending this section and section 401 of this title] apply to taxable years ending after the date of enact- ment of this Act [Sept. 2, 1974].’’ Amendment by section 2002(g)(10) of Pub. L. 93–406 ef- fective on Jan. 1, 1975, see section 2002(i)(2) of Pub. L. 93–406, set out as an Effective Date note under section 4973 of this title. Amendment by section 2005(c)(3) 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. Amendment by section 2007(b)(2) of Pub. L. 93–406 ap- plicable to taxable years ending on or after Sept. 21, 1972, see section 2007(c) of Pub. L. 93–406, set out as a note under section 122 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 OF 1966 AMENDMENT Amendment by Pub. L. 89–365 applicable with respect to taxable years ending after Dec. 31, 1965, see section 1(d) of Pub. L. 89–365, set out as an Effective Date note under section 122 of this title. EFFECTIVE DATE OF 1965 AMENDMENT Amendment by Pub. L. 89–97 applicable to taxable years beginning after Dec. 31, 1966, see section 106(e) of Pub. L. 89–97, set out as a note under section 213 of this title. Amendment by Pub. L. 89–44 applicable to taxable years beginning on or after July 1, 1965, see section 809(f) of Pub. L. 89–44, set out as a note under section 6420 of this title. EFFECTIVE DATE OF 1964 AMENDMENT Amendment by Pub. L. 88–272 applicable to taxable years beginning after Dec. 31, 1963, see section 232(g) of Pub. L. 88–272, set out as a note under section 5 of this title. EFFECTIVE DATE OF 1962 AMENDMENT Pub. L. 87–834, § 11(c)(2), Oct. 16, 1962, 76 Stat. 1006, provided that: ‘‘The amendment made by subsection (b) [amending this section] shall apply to taxable years ending after December 31, 1962.’’ Amendment by Pub. L. 87–792 applicable to taxable years beginning after Dec. 31, 1962, see section 8 of Pub. L. 87–792, set out as a note under section 22 of this title. SAVINGS PROVISION For provisions that nothing in amendment by Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liabil- ity for tax for periods ending after Nov. 5, 1990, see sec- tion 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title. Pub. L. 94–455, title XIX, § 1951(b)(1)(B), Oct. 4, 1976, 90 Stat. 1836, provided that: ‘‘Notwithstanding subpara- graph (A) [repealing subsec. (i) of this section], if the provisions of section 72(i) applied to amounts received in taxable years beginning before January 1, 1977, under an annuity contract, then amounts received under such contract on or after such date shall be treated as if such provisions were not repealed.’’ SPECIAL RULES FOR USE OF RETIREMENT FUNDS Pub. L. 116–136, div. A, title II, § 2202, Mar. 27, 2020, 134 Stat. 340, as amended by Pub. L. 116–260, div. N, title II, § 280(a), Dec. 27, 2020, 134 Stat. 1982; Pub. L. 117–328, div. T, title V, § 501(c)(2)(A), Dec. 29, 2022, 136 Stat. 5389, pro- vided that: ‘‘(a) TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS.— ‘‘(1) IN GENERAL.—Section 72(t) of the Internal Rev- enue Code of 1986 shall not apply to any coronavirus- related distribution. ‘‘(2) AGGREGATE DOLLAR LIMITATION.— ‘‘(A) IN GENERAL.—For purposes of this sub- section, the aggregate amount of distributions re- ceived by an individual which may be treated as coronavirus-related distributions for any taxable year shall not exceed $100,000. ‘‘(B) TREATMENT OF PLAN DISTRIBUTIONS.—If a dis- tribution to an individual would (without regard to subparagraph (A)) be a coronavirus-related dis- tribution, a plan shall not be treated as violating any requirement of the Internal Revenue Code of 1986 merely because the plan treats such distribu- tion as a coronavirus-related distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the em- ployer) to such individual exceeds $100,000. ‘‘(C) CONTROLLED GROUP.—For purposes of sub- paragraph (B), the term ‘controlled group’ means any group treated as a single employer under sub- section (b), (c), (m), or (o) of section 414 of the Inter- nal Revenue Code of 1986. ‘‘(3) AMOUNT DISTRIBUTED MAY BE REPAID.— ‘‘(A) IN GENERAL.—Any individual who receives a coronavirus-related distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make 1 or more contributions in an aggregate Page 493 TITLE 26—INTERNAL REVENUE CODE § 72 amount not to exceed the amount of such distribu- tion to an eligible retirement plan of which such in- dividual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), of the Internal Revenue Code of 1986, as the case may be. ‘‘(B) TREATMENT OF REPAYMENTS OF DISTRIBUTIONS FROM ELIGIBLE RETIREMENT PLANS OTHER THAN IRAS.—For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to subpara- graph (A) with respect to a coronavirus-related dis- tribution from an eligible retirement plan other than an individual retirement plan, then the tax- payer shall, to the extent of the amount of the con- tribution, be treated as having received the coronavirus-related distribution in an eligible roll- over distribution (as defined in section 402(c)(4) of such Code) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution. ‘‘(C) TREATMENT OF REPAYMENTS OF DISTRIBUTIONS FROM IRAS.—For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to subparagraph (A) with respect to a coronavirus-re- lated distribution from an individual retirement plan (as defined by section 7701(a)(37) of such Code), then, to the extent of the amount of the contribu- tion, the coronavirus-related distribution shall be treated as a distribution described in section 408(d)(3) of such Code and as having been trans- ferred to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the dis- tribution. ‘‘(4) DEFINITIONS.—For purposes of this subsection— ‘‘(A) CORONAVIRUS-RELATED DISTRIBUTION.—Except as provided in paragraph (2), the term ‘coronavirus- related distribution’ means any distribution from an eligible retirement plan made— ‘‘(i) on or after January 1, 2020, and before De- cember 31, 2020, ‘‘(ii) to an individual— ‘‘(I) who is diagnosed with the virus SARS–CoV–2 or with coronavirus disease 2019 (COVID–19) by a test approved by the Centers for Disease Control and Prevention, ‘‘(II) whose spouse or dependent (as defined in section 152 of the Internal Revenue Code of 1986) is diagnosed with such virus or disease by such a test, or ‘‘(III) who experiences adverse financial con- sequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the in- dividual due to such virus or disease, or other factors as determined by the Secretary of the Treasury (or the Secretary’s delegate). ‘‘(B) EMPLOYEE CERTIFICATION.—The adminis- trator of an eligible retirement plan may rely on an employee’s certification that the employee satisfies the conditions of subparagraph (A)(ii) in deter- mining whether any distribution is a coronavirus- related distribution. ‘‘(C) ELIGIBLE RETIREMENT PLAN.—The term ‘eligi- ble retirement plan’ has the meaning given such term by section 402(c)(8)(B) of the Internal Revenue Code of 1986. ‘‘(5) INCOME INCLUSION SPREAD OVER 3-YEAR PERIOD.— ‘‘(A) IN GENERAL.—In the case of any coronavirus- related distribution, unless the taxpayer elects not to have this paragraph apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 3-taxable-year period beginning with such taxable year. ‘‘(B) SPECIAL RULE.—For purposes of subpara- graph (A), rules similar to the rules of subpara- graph (E) of section 408A(d)(3) of the Internal Rev- enue Code of 1986 shall apply. ‘‘(6) SPECIAL RULES.— ‘‘(A) EXEMPTION OF DISTRIBUTIONS FROM TRUSTEE TO TRUSTEE TRANSFER AND WITHHOLDING RULES.—For purposes of sections 401(a)(31), 402(f), and 3405 of the Internal Revenue Code of 1986, coronavirus-related distributions shall not be treated as eligible roll- over distributions. ‘‘(B) CORONAVIRUS-RELATED DISTRIBUTIONS TREAT- ED AS MEETING PLAN DISTRIBUTION REQUIREMENTS.— For purposes of the Internal Revenue Code of 1986, a coronavirus-related distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(i), 403(b)(11), and 457(d)(1)(A) of such Code and section 8433(h)(1) of title 5, United States Code, and, in the case of a money purchase pension plan, a coronavirus-related distribution which is an in-service withdrawal shall be treated as meeting the distribution rules of sec- tion 401(a) of the Internal Revenue Code of 1986. ‘‘(b) LOANS FROM QUALIFIED PLANS.— ‘‘(1) INCREASE IN LIMIT ON LOANS NOT TREATED AS DISTRIBUTIONS.—In the case of any loan from a quali- fied employer plan (as defined under section 72(p)(4) of the Internal Revenue Code of 1986) to a qualified individual made during the 180-day period beginning on the date of the enactment of this Act [Mar. 27, 2020]— ‘‘(A) clause (i) of section 72(p)(2)(A) of such Code shall be applied by substituting ‘$100,000’ for ‘$50,000’, and ‘‘(B) clause (ii) of such section shall be applied by substituting ‘the present value of the nonforfeitable accrued benefit of the employee under the plan’ for ‘one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan’. ‘‘(2) DELAY OF REPAYMENT.—In the case of a quali- fied individual with an outstanding loan (on or after the date of the enactment of this Act) from a quali- fied employer plan (as defined in section 72(p)(4) of the Internal Revenue Code of 1986)— ‘‘(A) if the due date pursuant to subparagraph (B) or (C) of section 72(p)(2) of such Code for any repay- ment with respect to such loan occurs during the period beginning on the date of the enactment of this Act and ending on December 31, 2020, such due date shall be delayed for 1 year, ‘‘(B) any subsequent repayments with respect to any such loan shall be appropriately adjusted to re- flect the delay in the due date under subparagraph (A) and any interest accruing during such delay, and ‘‘(C) in determining the 5-year period and the term of a loan under subparagraph (B) or (C) of sec- tion 72(p)(2) of such Code, the period described in subparagraph (A) of this paragraph shall be dis- regarded. ‘‘(3) QUALIFIED INDIVIDUAL.—For purposes of this subsection, the term ‘qualified individual’ means any individual who is described in subsection (a)(4)(A)(ii). ‘‘(c) PROVISIONS RELATING TO PLAN AMENDMENTS.— ‘‘(1) IN GENERAL.—If this subsection applies to any amendment to any plan or annuity contract— ‘‘(A) such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in paragraph (2)(B)(i), and ‘‘(B) except as provided by the Secretary of the Treasury (or the Secretary’s delegate), such plan or contract shall not fail to meet the requirements of section 411(d)(6) of the Internal Revenue Code of 1986 and section 204(g) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1054(g)] by reason of such amendment. ‘‘(2) AMENDMENTS TO WHICH SUBSECTION APPLIES.— ‘‘(A) IN GENERAL.—This subsection shall apply to any amendment to any plan or annuity contract which is made— ‘‘(i) pursuant to any provision of this section, or pursuant to any regulation issued by the Sec- Page 494 TITLE 26—INTERNAL REVENUE CODE § 73 retary of the Treasury or the Secretary of Labor (or the delegate of either such Secretary) under any provision of this section, and ‘‘(ii) on or before the last day of the first plan year beginning on or after January 1, 2025, or such later date as the Secretary of the Treasury (or the Secretary’s delegate) may prescribe. In the case of a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986), clause (ii) shall be applied by substituting the date which is 2 years after the date otherwise applied under clause (ii). ‘‘(B) CONDITIONS.—This subsection shall not apply to any amendment unless— ‘‘(i) during the period— ‘‘(I) beginning on the date that this section or the regulation described in subparagraph (A)(i) takes effect (or in the case of a plan or contract amendment not required by this section or such regulation, the effective date specified by the plan), and ‘‘(II) ending on the date described in subpara- graph (A)(ii) (or, if earlier, the date the plan or contract amendment is adopted), the plan or contract is operated as if such plan or contract amendment were in effect, and ‘‘(ii) such plan or contract amendment applies retroactively for such period.’’ [Pub. L. 116–260, div. N, title II, § 280(b), Dec. 27, 2020, 134 Stat. 1982, provided that: ‘‘The amendment made by this section [amending section 2202 of Pub. L. 116–136, set out above] shall apply as if included in the enact- ment of section 2202 of the CARES Act [Pub. L. 116–136, approved Mar. 27, 2020].’’] APPLICABILITY OF SUBSECTION (t) Pub. L. 100–647, title I, § 1011A(c)(13), Nov. 10, 1988, 102 Stat. 3476, provided that: ‘‘Section 72(t) of the 1986 Code shall apply to any distribution without regard to whether such distribution is made without the consent of the participant pursuant to section 411(a)(11) or sec- tion 417(e) of the 1986 Code.’’ 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. DEFINITION OF TERMS USED IN TITLE I OF PUB. L. 110–458 Pub. L. 110–458, title I, § 100, Dec. 23, 2008, 122 Stat. 5093, provided that: ‘‘For purposes of this title [see Ta- bles for classification]: ‘‘(1) AMENDMENT OF 1986 CODE.—The term ‘1986 Code’ means the Internal Revenue Code of 1986. ‘‘(2) AMENDMENT OF ERISA.—The term ‘ERISA’ means the Employee Retirement Income Security Act of 1974 [Pub. L. 93–406; see Short Title note under section 1001 of Title 29, Labor]. ‘‘(3) 2006 ACT.—The term ‘2006 Act’ means the Pen- sion Protection Act of 2006 [Pub. L. 109–280; see Short Title of 2006 Amendment note under section 1001 of Title 29, Labor].’’ § 73. Services of child (a) Treatment of amounts received Amounts received in respect of the services of a child shall be included in his gross income and not in the gross income of the parent, even though such amounts are not received by the child. (b) Treatment of expenditures All expenditures by the parent or the child at- tributable to amounts which are includible in the gross income of the child (and not of the parent) solely by reason of subsection (a) shall be treated as paid or incurred by the child. (c) Parent defined For purposes of this section, the term ‘‘par- ent’’ includes an individual who is entitled to the services of a child by reason of having paren- tal rights and duties in respect of the child. (d) Cross reference For assessment of tax against parent in certain cases, see section 6201(c). (Aug. 16, 1954, ch. 736, 68A Stat. 24.) § 74. Prizes and awards (a) General rule Except as otherwise provided in this section or in section 117 (relating to qualified scholar- ships), gross income includes amounts received as prizes and awards. (b) Exception for certain prizes and awards transferred to charities Gross income does not include amounts re- ceived as prizes and awards made primarily in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achieve- ment, but only if— (1) the recipient was selected without any action on his part to enter the contest or pro- ceeding; (2) the recipient is not required to render substantial future services as a condition to receiving the prize or award; and (3) the prize or award is transferred by the payor to a governmental unit or organization described in paragraph (1) or (2) of section 170(c) pursuant to a designation made by the recipient. (c) Exception for certain employee achievement awards (1) In general Gross income shall not include the value of an employee achievement award (as defined in section 274(j)) received by the taxpayer if the cost to the employer of the employee achieve- ment award does not exceed the amount allow- able as a deduction to the employer for the cost of the employee achievement award. (2) Excess deduction award If the cost to the employer of the employee achievement award received by the taxpayer