Title 26 — Internal Revenue CodeRelease 119-73
§4974 Excise Tax on Certain Accumulations in Qualified Retirement Plans
Title 26 › Subtitle Subtitle D— Miscellaneous Excise Taxes › Chapter 43— QUALIFIED PENSION, ETC., PLANS › § 4974
Summary
Retirement accounts like IRAs, 401(a) plans, 403(b) annuities, and 457(b) plans require minimum withdrawals each year once the rules in sections like 401(a)(9) kick in. If you take out less than your required minimum distribution, you owe an extra tax equal to 25 percent of the shortfall. That 25 percent rate applies for tax years beginning after December 29, 2022; before that the rate in the statute was 50 percent. There are two escape hatches. The IRS can waive the tax if the shortfall was due to reasonable error and you are taking reasonable steps to fix it. Separately, if you withdraw the missed amount from the same plan during a "correction window" and file a return reflecting the tax, the tax is reduced under the correction rules. The window generally runs until the earliest of an IRS deficiency notice, assessment of the tax, or the last day of the second tax year after the year the tax arose.
Full Legal Text
Title 26, §4974
Internal Revenue Code — Source: USLM XML via OLRC
(a)If the amount distributed during the taxable year of the payee under any qualified retirement plan or any eligible deferred compensation plan (as defined in section 457(b)) is less than the minimum required distribution for such taxable year, there is hereby imposed a tax equal to 25 percent of the amount by which such minimum required distribution exceeds the actual amount distributed during the taxable year. The tax imposed by this section shall be paid by the payee.
(b)For purposes of this section, the term “minimum required distribution” means the minimum amount required to be distributed during a taxable year under section 401(a)(9), 403(b)(10), 408(a)(6), 408(b)(3), or 457(d)(2), as the case may be, as determined under regulations prescribed by the Secretary.
(c)For purposes of this section, the term “qualified retirement plan” means—
(1)a plan described in section 401(a) which includes a trust exempt from tax under section 501(a),
(2)an annuity plan described in section 403(a),
(3)an annuity contract described in section 403(b),
(4)an individual retirement account described in section 408(a), or
(5)an individual retirement annuity described in section 408(b).
(d)If the taxpayer establishes to the satisfaction of the Secretary that—
(1)the shortfall described in subsection (a) in the amount distributed during any taxable year was due to reasonable error, and
(2)reasonable steps are being taken to remedy the shortfall,
(e)(1)In the case of a taxpayer who—
(A)receives a distribution, during the correction window, of the amount which resulted in imposition of a tax under subsection (a) from the same plan to which such tax relates, and
(B)submits a return, during the correction window, reflecting such tax (as modified by this subsection),
(2)For purposes of this subsection, the term “correction window” means the period of time beginning on the date on which the tax under subsection (a) is imposed with respect to a shortfall of distributions from a plan described in subsection (a), and ending on the earliest of—
(A)the date of mailing a notice of deficiency with respect to the tax imposed by subsection (a) under section 6212,
(B)the date on which the tax imposed by subsection (a) is assessed, or
(C)the last day of the second taxable year that begins after the end of the taxable year in which the tax under subsection (a) is imposed.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2022—Subsec. (a). Pub. L. 117–328, § 302(a), substituted “25 percent” for “50 percent”. Subsec. (e). Pub. L. 117–328, § 302(b), added subsec. (e). 1986—Pub. L. 99–514, § 1121(a)(1), amended section generally, substituting provisions imposing an excise tax on certain accumulations in qualified retirement plans for provisions imposing an excise tax on certain accumulations in individual retirement accounts and annuities. Subsec. (a). Pub. L. 99–514, § 1852(a)(7)(B), substituted “section 408(a)(6) or 408(b)(3)” for “section 408(a)(6) or (7), or 408(b)(3) or (4)”. Subsec. (b). Pub. L. 99–514, § 1852(a)(7)(C), substituted “section 408(a)(6) or 408(b)(3)” for “section 408(a)(6) or (7) or 408(b)(3) or (4)”. 1978—Subsec. (c). Pub. L. 95–600 added subsec. (c). 1976—Subsec. (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.
Statutory Notes and Related Subsidiaries
Effective Date
of 2022 Amendment Pub. L. 117–328, div. T, title III, § 302(c), Dec. 29, 2022, 136 Stat. 5339, provided that: “The
Amendments
made by this section [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Dec. 29, 2022].”
Effective Date
of 1986 AmendmentAmendment by section 1121(a)(1) of Pub. L. 99–514 applicable to years beginning after Dec. 31, 1988, with special provisions for plans maintained pursuant to collective bargaining agreements ratified before Mar. 1, 1986, and transition rules, see section 1121(d) of Pub. L. 99–514, set out as a note under section 401 of this title. Amendment by section 1852(a)(7)(B), (C) of Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions 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.
Effective Date
of 1978 Amendment Pub. L. 95–600, title I, § 157(i)(2), Nov. 6, 1978, 92 Stat. 2809, provided that: “The amendment made by paragraph (1) [amending this section] shall apply to taxable years beginning after December 31, 1975.”
Effective Date
Section effective 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. 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. § 4974
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73