Title 26 — Internal Revenue CodeRelease 119-73
§4979 Tax on certain excess contributions
Title 26 › Subtitle Subtitle D— - Miscellaneous Excise Taxes › Chapter CHAPTER 43— - QUALIFIED PENSION, ETC., PLANS › § 4979
Summary
Imposes a tax equal to 10% on the total of any “excess contributions” and any “excess aggregate contributions” made to certain retirement plans for a plan year. The employer must pay the tax. “Excess contributions” are the extra amounts described in sections 401(k)(8)(B), 408(k)(6)(C), and 501(c)(18). “Excess aggregate contribution” is defined in section 401(m)(6)(B). A “plan” means common employer retirement arrangements, including 401(a) plans with tax‑exempt trusts, 403(a) annuity plans, 403(b) annuity contracts, simplified employee pensions under 408(k), and plans under 501(c)(18). No tax applies if the excess (plus earnings) is returned or forfeited before the close of the first 2½ months after the plan year (6 months for eligible automatic contribution arrangements). Any such returned amount is taxed to the person who gets it in the year it is paid.
Full Legal Text
Title 26, §4979
Internal Revenue Code — Source: USLM XML via OLRC
(a)In the case of any plan, there is hereby imposed a tax for the taxable year equal to 10 percent of the sum of—
(1)any excess contributions under such plan for the plan year ending in such taxable year, and
(2)any excess aggregate contributions under the plan for the plan year ending in such taxable year.
(b)The tax imposed by subsection (a) shall be paid by the employer.
(c)For purposes of this section, the term “excess contributions” has the meaning given such term by section 401(k)(8)(B), 408(k)(6)(C), and 501(c)(18).
(d)For purposes of this section, the term “excess aggregate contribution” has the meaning given to such term by section 401(m)(6)(B). For purposes of determining excess aggregate contributions under an annuity contract described in section 403(b), such contract shall be treated as a plan described in subsection (e)(1).
(e)For purposes of this section, the term “plan” means—
(1)a plan described in section 401(a) which includes a trust exempt from tax under section 501(a),
(2)any annuity plan described in section 403(a),
(3)any annuity contract described in section 403(b),
(4)a simplified employee pension of an employer which satisfies the requirements of section 408(k), and
(5)a plan described in section 501(c)(18).
(f)(1)No tax shall be imposed under this section on any excess contribution or excess aggregate contribution, as the case may be, to the extent such contribution (together with any income allocable thereto through the end of the plan year for which the contribution was made) is distributed (or, if forfeitable, is forfeited) before the close of the first 2½ months (6 months in the case of an excess contribution or excess aggregate contribution to an eligible automatic contribution arrangement (as defined in section 414(w)(3))) of the following plan year.
(2)Any amount distributed as provided in paragraph (1) shall be treated as earned and received by the recipient in the recipient’s taxable year in which such distributions were made.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2006—Subsec. (f). Pub. L. 109–280, § 902(e)(1)(B), substituted “specified period after” for “2½ months of” in heading. Subsec. (f)(1). Pub. L. 109–280, § 902(e)(1)(A), (3)(A), inserted “through the end of the plan year for which the contribution was made” after “thereto” and “(6 months in the case of an excess contribution or excess aggregate contribution to an eligible automatic contribution arrangement (as defined in section 414(w)(3)))” after “2½ months”. Subsec. (f)(2). Pub. L. 109–280, § 902(e)(2), reenacted heading without change and amended text of par. (2) generally. Prior to amendment, text read as follows: “(A) In general.—Except as provided in subparagraph (B), any amount distributed as provided in paragraph (1) shall be treated as received and earned by the recipient in his taxable year for which such contribution was made. “(B) De minimis distributions.—If the total excess contributions and excess aggregate contributions distributed to a recipient under a plan for any plan year are less than $100, such distributions (and any income allocable thereto) shall be treated as earned and received by the recipient in his taxable year in which such distributions were made.” 1988—Subsec. (a)(1). Pub. L. 100–647, § 1011(l)(8), struck out “a cash or deferred arrangement which is part of” after “contributions under”. Subsec. (c). Pub. L. 100–647, § 1011(l)(9), struck out “403(b),” and substituted “408(k)(6)(C)” for “408(k)(8)(B)”. Subsec. (d). Pub. L. 100–647, § 1011(l)(10), inserted sentence at end relating to determination of excess aggregate contributions under certain annuity contracts. Subsec. (f)(2). Pub. L. 100–647, § 1011(l)(11), substituted “Year of inclusion” for “Included in prior year” as heading, and amended text generally. Prior to amendment, text read as follows: “Any amount distributed as provided in paragraph (1) shall be treated as received and earned by the recipient in his taxable year for which such contribution was made.”
Statutory Notes and Related Subsidiaries
Effective Date
of 2006 AmendmentAmendment by Pub. L. 109–280 applicable to plan years beginning after Dec. 31, 2007, see section 902(g) of Pub. L. 109–280, set out as a note under section 401 of this title.
Effective Date
of 1988 AmendmentAmendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Effective Date
Section applicable to plan years beginning after Dec. 31, 1986, with special provisions for plans maintained pursuant to collective bargaining agreements ratified before Mar. 1, 1986, and for annuity contracts under section 403(b) of this title, see section 1117(d) of Pub. L. 99–514, set out as an
Effective Date
of 1986 Amendment note under section 401 of this title.
Regulations
Secretary of the Treasury or his delegate to issue before Feb. 1, 1988, final
Regulations
to carry out this section, see section 1141 of Pub. L. 99–514, set out as a note under section 401 of this title. Plan
Amendments
Not Required Until January 1, 1989For provisions directing that if any
Amendments
made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.
Reference
Citations & Metadata
Citation
26 U.S.C. § 4979
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73