§ 4973 Tax on excess contributions to certain tax-favored accounts and annuities

OLRC 119-134 · eCFR 2026-10-19 · 21 amending Acts · cited by 6 sections

Enacted 1974 · Pub. L. 93-406 Amended · 21 Acts

1974197619781980198119841986198819921996199719982000200120032004201420222025(a) Tax imposed(b) Excess contributions(c) Section 403(b) contracts(d) Excess contributions to Archer MSAs(e) Excess contributions to Coverdell education savings accounts(f) Excess contributions to Roth IRAs(g) Excess contributions to health savings accounts(h) Excess contributions to ABLE account
Connections Cited by 6 · Cites 14
§ 4973 Tax on excess contributions to certain tax-favored accounts and annuities
+2 more
Amended 1984, 1996, 1998
  • 1998 Pub. L. 105-206 Pub. L. 105–206, § 6023(18)(A), amended section catchline generally. Prior to amendment, catchline read as follows: “Tax on excess contributions to individual retirement accounts, medical savings accounts, certain section 403(b) contracts, and certain individual retirement annuities”.
  • 1996 Pub. L. 104-191 Pub. L. 104–191, § 301(e)(1), inserted “medical savings accounts,” after “accounts,” in section catchline.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 491(d)(55), substituted “and certain individual retirement annuities” for “certain individual retirement annuities, and certain retirement bonds” in section catchline.

Cases: Orzechowski v. Commissioner, 69 T.C. 750 (1978); Guest v. Commissioner, 72 T.C. 768 (1979); Johnson v. Commissioner, 74 T.C. 1057 (1980)

(a) Tax imposed In the case of—

Amended 1981, 1984, 1996
  • 1996 Pub. L. 104-191 Pub. L. 104–191, § 301(e)(1)–(3), struck out “or” at end of par. (1), added par. (2), and redesignated former par. (2) as (3).
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 491(d)(41), inserted “or” at end of par. (1), struck out “or” at end of par. (2), struck out par. (3) which imposed a tax in the case of a retirement bond, within the meaning of section 409, established for the benefit of any individual, and in the concluding provision substituted “or annuity” for “, annuity, or bond” and “or annuities” for “, annuities, or bonds”.
  • 1981 Pub. L. 97-34 Pub. L. 97–34, § 311(h)(9), substituted “The tax imposed by this subsection shall be paid by such individual” for “The tax imposed by this subsection shall be paid by the individual to whom a deduction is allowed for the taxable year under section 219 (determined without regard to subsection (b)(1) thereof) or section 220 (determined without regard to subsection (b)(1) thereof), whichever is appropriate”.
Cited by 2

    (1) an individual retirement account (within the meaning of section 408(a)),

    (2) an Archer MSA (within the meaning of section 220(d)),

    Amended 2000
    • 2000 Pub. L. 106-554 Pub. L. 106–554, § 1(a)(7) [title II, § 202(b)(10)], substituted “an Archer” for “a Archer”.
    • 2000 Pub. L. 106-554 Pub. L. 106–554, § 1(a)(7) [title II, § 202(a)(6)], substituted “Archer MSA” for “medical savings account”.

    (3) an individual retirement annuity (within the meaning of section 408(b)), a custodial account treated as an annuity contract under section 403(b)(7)(A) (relating to custodial accounts for regulated investment company stock),

    Amended 1976
    • 1976 Pub. L. 94-455 Pub. L. 94–455, §§ 1501(b)(8)(A), 1904(a)(22)(A), substituted “the individual to whom a deduction is allowed for the taxable year under section 219 (determined without regard to subsection (b)(1) thereof) or section 220 (determined without regard to subsection (b)(1) thereof), whichever is appropriate” for “such individual”, effective for taxable years beginning after December 31, 1976 and substituted “such individual” for “the individual to whom a deduction is allowed for the taxable year under section 219 (determined without regard to subsection (b)(1) thereof) or section 220 (determined without regard to subsection (b)(1) thereof), whichever is appropriate”, effective for the first day of the first month which begins more than 90 days after Oct. 4, 1976.
    Cited by 1

      (4) a Coverdell education savings account (as defined in section 530),

      Amended 1997, 2001
      • 2001 Pub. L. 107-22 Pub. L. 107–22, § 1(b)(1)(C), substituted “a Coverdell education savings” for “an education individual retirement”.
      • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(d)(1), added par. (4).

      (5) a health savings account (within the meaning of section 223(d)), or

      Amended 2003

      (6) an ABLE account (within the meaning of section 529A),

      Amended 2014

      there is imposed for each taxable year a tax in an amount equal to 6 percent of the amount of the excess contributions to such individual’s accounts or annuities (determined as of the close of the taxable year). The amount of such tax for any taxable year shall not exceed 6 percent of the value of the account or annuity (determined as of the close of the taxable year). In the case of an endowment contract described in section 408(b), the tax imposed by this section does not apply to any amount allocable to life, health, accident, or other insurance under such contract. The tax imposed by this subsection shall be paid by such individual.

      (b) Excess contributions For purposes of this section, in the case of individual retirement accounts or individual retirement annuities, the term “excess contributions” means the sum of—

      Amended 1978, 1984, 1986, 1988, 2022
      • 2022 Pub. L. 117-328 Pub. L. 117–328 inserted at end of concluding provisions: “Such term shall not include any designated nondeductible contribution (as defined in subparagraph (C) of section 408(o)(2)) which does not exceed the nondeductible limit under subparagraph (B) thereof by reason of an election under section 408(o)(5).”
      • 1988 Pub. L. 100-647 Pub. L. 100–647 substituted “shall be computed without regard to section 219(g)” for “(after application of section 408(o)(2)(B)(ii)) shall be increased by the nondeductible limit under section 408(o)(2)(B)” in last sentence.
      • 1986 Pub. L. 99-514 Pub. L. 99–514, § 1102(b)(1), inserted at end “For purposes of paragraphs (1)(B) and (2)(C), the amount allowable as a deduction under section 219 (after application of section 408(o)(2)(B)(ii)) shall be increased by the nondeductible limit under section 408(o)(2)(B).”
      • 1986 Pub. L. 99-514 Pub. L. 99–514, § 1848(f), in introductory provisions, substituted “or individual retirement annuities” for “, individual retirement annuities, or bonds”, in par. (1)(A), substituted “(other than a rollover contribution described in section 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8), or 408(d)(3)), over” for “or bonds (other than a rollover contribution described in section 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8), 405(d)(3), or 408(d)(3)), over”, and in par. (2)(A), struck out “or bonds” after “for the annuities”.
      • 1984 Pub. L. 98-369 Pub. L. 98–369, § 491(d)(43), substituted in provision following par. (2)(C) “or the individual retirement annuity” for “, individual retirement annuity, or bond”.
      • 1978 Pub. L. 95-600 Pub. L. 95–600, §§ 157(j)(1), 701(aa)(1), struck out in last sentence “if such distribution consists of an excess contribution solely because of employer contributions to a plan or contract described in section 219(b)(2) or by reason of the application of section 219(b)(1) (without regard to the $1,500 limitation) or section 220(b)(1) (without regard to the $1,750 limitation) and only if such distribution does not exceed the excess of $1,500 or $1,750 if applicable, over the amount described in paragraph (1)(B)” after “as an amount not contributed”.
      Cited by 2

        (1) the excess (if any) of—

        (A) the amount contributed for the taxable year to the accounts or for the annuities (other than a contribution to a Roth IRA or a rollover contribution described in section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16)), over

        Amended 1978, 1980, 1981, 1984, 1992, 1996, 1998, 2001
        • 2001 Pub. L. 107-16 Pub. L. 107–16, § 641(e)(11), substituted “408(d)(3), or 457(e)(16)” for “or 408(d)(3)”.
        • 1998 Pub. L. 105-206 Pub. L. 105–206, § 6005(b)(8)(B)(i), inserted “a contribution to a Roth IRA or” after “other than”.
        • 1996 Pub. L. 104-188 Pub. L. 104–188, § 1704(t)(72), provided that section 521(b)(41) of Pub. L. 102–318 shall be applied as if “section” appeared instead of “sections” in the material proposed to be stricken. See 1992 Amendment note below.
        • 1996 Pub. L. 104-188 Pub. L. 104–188, § 1704(t)(70), substituted “section” for “sections”.
        • 1992 Pub. L. 102-318 Pub. L. 102–318, which directed the substitution of “sections 402(c)” for “sections 402(a)(5), 402(a)(7)”, was executed by substituting “sections 402(c)” for “section 402(a)(5), 402(a)(7)”. See 1996 Amendment note above.
        • 1984 Pub. L. 98-369 Pub. L. 98–369, § 491(d)(42), which directed the amendment of subpar. (A) by substituting “and 408(d)(3)” for “408(d)(3), and 409(b)(3)(C)” was executed, as the probable intent of Congress, by substituting “or 408(d)(3))” for “408(d)(3)), or 409(b)(3)(C)”.
        • 1981 Pub. L. 97-34 Pub. L. 97–34, § 313(b)(2), inserted “405(d)(3),” after “403(b)(8),”.
        • 1980 Pub. L. 96-222 Pub. L. 96–222, § 101(a)(14)(B), inserted reference to section 402(a)(7).
        • 1978 Pub. L. 95-600 Pub. L. 95–600, § 156(c)(3), inserted reference to section 403(b)(8).

        (B) the amount allowable as a deduction under section 219 for such contributions, and

        Amended 1976, 1981
        • 1981 Pub. L. 97-34 Pub. L. 97–34, § 311(h)(7), substituted “section 219” for “section 219 or 220”.
        • 1976 Pub. L. 94-455 Pub. L. 94–455, § 1501(b)(8)(B), inserted “or 220” after “under section 219”.
        Cited by 1

          (2) the amount determined under this subsection for the preceding taxable year reduced by the sum of—

          Amended 1976, 1978
          • 1978 Pub. L. 95-600 Pub. L. 95–600, § 157(b)(3), substituted “reduced by the sum of—” for “reduced by the excess (if any) of”, struck out “the maximum amount allowable as a deduction under section 219 or 220 for the taxable year over the amount contributed to the accounts or for the annuities or bonds for the taxable years and reduced by the sum of the distributions out of the account (for the taxable year and all prior taxable years) which were included in the gross income of the payee under section 408(d)(1)” in provision preceding par. (A), and added subpars. (A), (B), and (C).
          • 1976 Pub. L. 94-455 Pub. L. 94–455, § 1501(b)(8)(C), inserted “or 220” after “under section 219” and “the taxable year and” before “all prior taxable years” and struck out provisions relating to the treatment of contributions out of individual retirement accounts, annuities or bonds to which section 408(d)(4) applied.
          Cited by 1

            (A) the distributions out of the account for the taxable year which were included in the gross income of the payee under section 408(d)(1),

            (B) the distributions out of the account for the taxable year to which section 408(d)(5) applies, and

            (C) the excess (if any) of the maximum amount allowable as a deduction under section 219 for the taxable year over the amount contributed (determined without regard to section 219(f)(6)) to the accounts or for the annuities (including the amount contributed to a Roth IRA) for the taxable year.

            Amended 1981, 1998
            • 1998 Pub. L. 105-206 Pub. L. 105–206, § 6005(b)(8)(B)(ii), inserted “(including the amount contributed to a Roth IRA)” after “annuities”.
            • 1981 Pub. L. 97-34 Pub. L. 97–34, § 311(h)(7), (10), substituted “section 219” for “section 219 or 220”, and “section 219(f)(6)” for “sections 219(c)(5) and 220(c)(6)”.
            Cited by 2

              For purposes of this subsection, any contribution which is distributed from the individual retirement account or the individual retirement annuity in a distribution to which section 408(d)(4) applies shall be treated as an amount not contributed. For purposes of paragraphs (1)(B) and (2)(C), the amount allowable as a deduction under section 219 shall be computed without regard to section 219(g). Such term shall not include any designated nondeductible contribution (as defined in subparagraph (C) of section 408(o)(2)) which does not exceed the nondeductible limit under subparagraph (B) thereof by reason of an election under section 408(o)(5).

              (c) Section 403(b) contracts For purposes of this section, in the case of a custodial account referred to in subsection (a)(3), the term “excess contributions” means the sum of—

              Amended 1976, 2004
              • 2004 Pub. L. 108-311 Pub. L. 108–311 substituted “subsection (a)(3)” for “subsection (a)(2)” in introductory provisions.
              • 1976 Pub. L. 94-455 Pub. L. 94–455, § 1904(a)(22)(B), substituted “subsection (a)(2)” for “subsection (a)(3)” in provisions preceding par. (1).
              Cited by 1

                (1) the excess (if any) of the amount contributed for the taxable year to such account (other than a rollover contribution described in section 403(b)(8) or 408(d)(3)(A)(iii)), over the lesser of the amount excludable from gross income under section 403(b) or the amount permitted to be contributed under the limitations contained in section 415 (or under whichever such section is applicable, if only one is applicable), and

                Amended 1978, 1980, 1984
                • 1984 Pub. L. 98-369 Pub. L. 98–369, § 491(d)(44), substituted “or 408(d)(3)(A)(iii)” for “, 408(d)(3)(A)(iii), or 409(b)(3)(C)”.
                • 1980 Pub. L. 96-222 Pub. L. 96–222, § 101(a)(13)(C), substituted “409(b)(3)(C)” for “409(d)(3)(C)”.
                • 1978 Pub. L. 95-600 Pub. L. 95–600, § 156(c)(5), inserted “(other than a rollover contribution described in section 403(b)(8), 408(d)(3)(A)(iii), or 409(d)(3)(C))” after “account”.

                (2) the amount determined under this subsection for the preceding taxable year, reduced by—

                (A) the excess (if any) of the lesser of (i) the amount excludable from gross income under section 403(b) or (ii) the amount permitted to be contributed under the limitations contained in section 415 over the amount contributed to the account for the taxable year (or under whichever such section is applicable, if only one is applicable), and

                (B) the sum of the distributions out of the account (for all prior taxable years) which are included in gross income under section 72(e).

                (d) Excess contributions to Archer MSAs For purposes of this section, in the case of Archer MSAs (within the meaning of section 220(d)), the term “excess contributions” means the sum of—

                Amended 1996, 1997, 2000
                • 2000 Pub. L. 106-554 Pub. L. 106–554, § 1(a)(7) [title II, § 202(a)(6), (b)(2)(C), (6)], substituted “Archer MSAs” for “medical savings accounts” in heading, “Archer MSAs” for “medical savings accounts” in introductory provisions, and “Archer MSA” for “medical savings account” in concluding provisions.
                • 1997 Pub. L. 105-33 Pub. L. 105–33 inserted “or section 138(c)(3)” after “section 220(f)(3)” in concluding provisions.
                • 1996 Pub. L. 104-191 Pub. L. 104–191, § 301(e)(4), added subsec. (d).

                (1) the aggregate amount contributed for the taxable year to the accounts (other than rollover contributions described in section 220(f)(5)) which is neither excludable from gross income under section 106(b) nor allowable as a deduction under section 220 for such year, and

                (2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of—

                (A) the distributions out of the accounts which were included in gross income under section 220(f)(2), and

                (B) the excess (if any) of—

                (i) the maximum amount allowable as a deduction under section 220(b)(1) (determined without regard to section 106(b)) for the taxable year, over

                (ii) the amount contributed to the accounts for the taxable year.

                For purposes of this subsection, any contribution which is distributed out of the Archer MSA in a distribution to which section 220(f)(3) or section 138(c)(3) applies shall be treated as an amount not contributed.

                (e) Excess contributions to Coverdell education savings accounts For purposes of this section—

                Amended 1997, 2001
                • 2001 Pub. L. 107-22 Pub. L. 107–22, § 1(b)(4), substituted “Coverdell education savings” for “education individual retirement” in heading.
                • 2001 Pub. L. 107-16 Pub. L. 107–16, § 402(a)(4)(A), which directed the substitution of “qualified tuition” for “qualified State tuition” wherever appearing in subsec. (e), could not be executed because the term “qualified State tuition” did not appear subsequent to amendment by section 401(g)(2)(D) of Pub. L. 107–16, which struck out par. (1)(B). See below.
                • 1997 Pub. L. 105-34 Pub. L. 105–34, § 213(d)(2), added subsec. (e).

                (1) In general In the case of Coverdell education savings accounts maintained for the benefit of any one beneficiary, the term “excess contributions” means the sum of—

                Amended 1998, 2001
                • 2001 Pub. L. 107-22 Pub. L. 107–22, § 1(b)(2)(B), substituted “Coverdell education savings” for “education individual retirement” in introductory provisions.
                • 2001 Pub. L. 107-16 Pub. L. 107–16, § 401(g)(2)(D), redesignated subpar. (C) as (B) and struck out former subpar. (B) which read as follows: “if any amount is contributed (other than a contribution described in section 530(b)(2)(B)) during such year to a qualified State tuition program for the benefit of such beneficiary, any amount contributed to such accounts for such taxable year; and”.
                • 1998 Pub. L. 105-206 Pub. L. 105–206, § 6004(d)(10)(A), reenacted heading without change and amended text of par. (1) generally. Prior to amendment, text read as follows: “In the case of education individual retirement accounts maintained for the benefit of any 1 beneficiary, the term ‘excess contributions’ means—

                  “(A) the amount by which the amount contributed for the taxable year to such accounts exceeds $500, and

                  “(B) any amount contributed to such accounts for any taxable year if any amount is contributed during such year to a qualified State tuition program for the benefit of such beneficiary.”

                Cited by 1

                  (A) the amount by which the amount contributed for the taxable year to such accounts exceeds $2,000 (or, if less, the sum of the maximum amounts permitted to be contributed under section 530(c) by the contributors to such accounts for such year); and

                  Amended 2001
                  • 2001 Pub. L. 107-16 Pub. L. 107–16, § 401(a)(2), (g)(2)(D), substituted “$2,000” for “$500” and inserted “and” at end.

                  (B) the amount determined under this subsection for the preceding taxable year, reduced by the sum of—

                  Amended 2001
                  • 2001 Pub. L. 107-16 Pub. L. 107–16, § 401(g)(2)(D), redesignated subpar. (C) as (B) and struck out former subpar. (B) which read as follows: “if any amount is contributed (other than a contribution described in section 530(b)(2)(B)) during such year to a qualified State tuition program for the benefit of such beneficiary, any amount contributed to such accounts for such taxable year; and”.

                  (i) the distributions out of the accounts for the taxable year (other than rollover distributions); and

                  (ii) the excess (if any) of the maximum amount which may be contributed to the accounts for the taxable year over the amount contributed to the accounts for the taxable year.

                  (2) Special rules For purposes of paragraph (1), the following contributions shall not be taken into account:

                  Amended 1998
                  • 1998 Pub. L. 105-206 Pub. L. 105–206, § 6004(d)(10)(B), redesignated subpar. (C) as (B) and struck out former subpar. (B) which read as follows: “Any contribution described in section 530(b)(2)(B) to a qualified State tuition program.”

                  (A) Any contribution which is distributed out of the Coverdell education savings account in a distribution to which section 530(d)(4)(C) applies.

                  Amended 2001
                  • 2001 Pub. L. 107-22 Pub. L. 107–22, § 1(b)(2)(B), substituted “Coverdell education savings” for “education individual retirement”.

                  (B) Any rollover contribution.

                  Amended 1998
                  • 1998 Pub. L. 105-206 Pub. L. 105–206, § 6004(d)(10)(B), redesignated subpar. (C) as (B) and struck out former subpar. (B) which read as follows: “Any contribution described in section 530(b)(2)(B) to a qualified State tuition program.”

                  (f) Excess contributions to Roth IRAs For purposes of this section, in the case of contributions to a Roth IRA (within the meaning of section 408A(b)), the term “excess contributions” means the sum of—

                  Amended 1997, 1998
                  • 1998 Pub. L. 105-206 Pub. L. 105–206, § 6005(b)(8)(C), made technical amendment to directory language of Pub. L. 105–34, § 302(b). See 1997 Amendment note below.
                  • 1997 Pub. L. 105-34 Pub. L. 105–34, § 302(b), as amended by Pub. L. 105–206, § 6005(b)(8)(C), added subsec. (f).

                  (1) the excess (if any) of—

                  (A) the amount contributed for the taxable year to Roth IRAs (other than a qualified rollover contribution described in section 408A(e)), over

                  Amended 1998
                  • 1998 Pub. L. 105-206 Pub. L. 105–206, § 6005(b)(8)(A)(i), substituted “Roth IRAs” for “such accounts”.

                  (B) the amount allowable as a contribution under sections 408A(c)(2) and (c)(3), and

                  (2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of—

                  (A) the distributions out of the accounts for the taxable year, and

                  (B) the excess (if any) of the maximum amount allowable as a contribution under sections 408A(c)(2) and (c)(3) for the taxable year over the amount contributed by the individual to all individual retirement plans for the taxable year.

                  Amended 1998
                  • 1998 Pub. L. 105-206 Pub. L. 105–206, § 6005(b)(8)(A)(ii), substituted “by the individual to all individual retirement plans” for “to the accounts”.

                  For purposes of this subsection, any contribution which is distributed from a Roth IRA in a distribution described in section 408(d)(4) shall be treated as an amount not contributed.

                  (g) Excess contributions to health savings accounts For purposes of this section, in the case of health savings accounts (within the meaning of section 223(d)), the term “excess contributions” means the sum of—

                  Amended 2003

                  (1) the aggregate amount contributed for the taxable year to the accounts (other than a rollover contribution described in section 220(f)(5) or 223(f)(5)) which is neither excludable from gross income under section 106(d) nor allowable as a deduction under section 223 for such year, and

                  (2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of—

                  (A) the distributions out of the accounts which were included in gross income under section 223(f)(2), and

                  (B) the excess (if any) of—

                  (i) the maximum amount allowable as a deduction under section 223(b) (determined without regard to section 106(d)) for the taxable year, over

                  (ii) the amount contributed to the accounts for the taxable year.

                  For purposes of this subsection, any contribution which is distributed out of the health savings account in a distribution to which section 223(f)(3) applies shall be treated as an amount not contributed.

                  (h) Excess contributions to ABLE account For purposes of this section—

                  Amended 2014
                  Cited by 1

                    (1) In general In the case of an ABLE account (within the meaning of section 529A), the term “excess contributions” means the amount by which the amount contributed for the taxable year to such account (other than contributions under section 529A(c)(1)(C) or contributions received in a qualified ABLE rollover contribution described in section 530A(d)(4)(B)) exceeds the contribution limit under section 529A(b)(2)(B).

                    Amended 2025
                    • 2025 Pub. L. 119-21 Pub. L. 119–21 inserted “or contributions received in a qualified ABLE rollover contribution described in section 530A(d)(4)(B)” after “other than contributions under section 529A(c)(1)(C)”.

                    (2) Special rule For purposes of this subsection, any contribution which is distributed out of the ABLE account in a distribution to which the last sentence of section 529A(b)(2) applies shall be treated as an amount not contributed.